Chapter 7 (Group Health Insurnace)
Large Group Underwriting Process
- A "Large group" for health insurance in California is a single employer with more than 100 full-time employees. - probationary period of not more than 90 days.
Blanket Insurance
- Blanket policies do not name specific individuals as insureds, the insured organization/business must certify a covered person's claim as legitimate. - Group blanket insurance covers a group of individuals whose membership changes frequently - policy cannot exceed one year.
Employment-Related Groups
- Covers not less than 2 public or private employees - Issued to the employer with premiums being paid by the employer, employee, or jointly Insures either all employees or all classes of employees as determined by conditions pertaining to employment - Written for the benefit of someone other than the employer, such as a trustee representing the employees and dependents - When written on a contributory basis, the benefits must be offered to all eligible employees
Dependent Eligibility and Continuation
- Eligible dependents include the employee's spouse and all children from birth until age 26. -Proof of the child's incapacity and dependency must be furnished to the insurer within 31 days of the child's attainment of the limiting age. - Subsequent proof may be required by the insurer, but not more frequently than annually after the 2-year period following the child's attainment of the limiting age.
Continuation of Coverage Under COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
- Employees must be notified of their right to continue coverage within 14 days of a qualifying event. - The employee or the beneficiary must notify the employer within 60 days if they elect to continue coverage. - Employers may require a former employee or their surviving spouse to pay up to 102% of the premium.
Renewability
- Failure of the plan sponsor to pay premiums timely - Failure of the plan sponsor to comply with a material provision, such as maintaining a minimum required percentage of participation - The plan sponsor committed an act of fraud or intentional misrepresentation of a material fact regarding the terms of the plan - The employer is no longer a member of the association that sponsors a plan - There is no covered employee that lives or works in the service area of a network plan - The issuer of coverage ceases to offer coverage in a particular market
Conversion Period Coverage
- If an employee under a group policy becomes entitled under the terms of the policy to have an individual policy issued without evidence of insurability (as long as an application is submitted with the initial premium) - 15 days prior to the 31-day expiration period, the employee must be given an additional period to exercise this right. The additional period will expire 25 days after the notice, but will not extend beyond 60 days after the 31-day grace period provided in the policy.
The FMLA provides 12 workweeks of leave in a 12-month period with regard to the following situations:
- The birth of a child and to care for the newborn child within 1 year of birth. - The placement with the employee of a child for adoption or foster care and to care for the newly placed child within 1 year of placement. - To care for the employee's spouse, child, or parent who has a serious health condition. - A serious health condition that makes the employee unable to perform the essential functions of his or her job. - Any qualifying crisis arising out of the employee's spouse, children, or parent being covered as a military member on "covered active duty". - 26 workweeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness who is the spouse, son, daughter, parent, or next of kin to the employee (Military Caregiver Leave).
Multiple Employer Trusts (METs)
- The sponsor develops the plan, sets the participation rules, and administers the plan. - Due to the smaller size of the individual companies participating in the Trust, group health coverage is almost always fully insured, relieving the Trust and participant employers of most liability for the claims of employees. - The Trust gets the Master Policy.
Creditor Group
- This type of group covers debtors who are obligated to repay an indebtedness in equal installments over a year or more and repay a final balance in any amount on a certain date to a creditor. - To qualify, the group must have at least 10 new entrants yearly, the amounts insured cannot exceed the balance of the debt, and the premiums are paid by or through the creditor.
Events that will cause termination of continuing health coverage by COBRA are:
- Timely premium payments are not made - Employer ceases to maintain any group health plan - Employee becomes eligible for Medicare benefits; dependents may remain under COBRA - Employee becomes eligible for any other group health plan - Employee converts to an individual health plan
A Small Employer is defined as any person, firm, corporation, partnership, or association that is actively engaged in business and has ______ employees or less.
100 employees or less.
A small group for health insurance in California is a single employer with ______ or fewer full-time equivalent employees (persons who work at least 30 hours per week).
100 or fewer 'full-time equivalent' employees
In noncontributory group health plans, how many eligible employees must be covered by the plan?
100%
If an employee under a group policy becomes entitled under the terms of the policy to have an individual policy issued without evidence of insurability and is not given notice of this right within ______ days prior to the expiration period, the employee must be given an additional period to exercise this right.
15 days prior
The pregnancy discrimination act applies to groups with ______ or more employees.
15 or more employees.
Cal-COBRA permits the insurer to charge employees up to ___% of the premium.
150% of the premium.
In a group health policy as specified by the California Insurance Code, the validity of the policy generally cannot be contested after it has been in force for:
2 years.
Small employers with _____ or fewer employees who average less than $50,000 in annual income may be eligible for federal premium tax credits of up to 50% of the employee premium for a health plan purchased through California's Small Business Health Options exchange (SHOP).
25 or fewer employees
Small groups obtain health insurance through:
California's Small Business Health Options exchange, known as 'SHOP' or through any of the private exchanges
What benefit does COBRA provide to employees when an employee is terminated?
Continuation of health insurance at the employee's expense for up to 18 months
The employees of a corporation must each pay a portion of the premium for their group insurance. This means they are members of a _____________.
Contributory group plan
Which statement would be considered inaccurate regarding the underwriting of a group plan?
Contributory plans require 100% employee participation.
When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the:
Conversion Privilege
An individual policy obtained through a group conversion will have higher premiums because the:
Conversion policy will be issued at the attained (current) age of the insured
Which provision of group health plans is used to determine primary and secondary coverage when an insured is covered by more than one insurance plan?
Coordination of Benefits
Which of the following is consistent with group health underwriting?
Each member of the group is covered regardless of his or her health history
All of the following are correct regarding an employer group health insurance plan's eligibility requirements, EXCEPT: A Employees must be considered full-time and actively at work B Employees must sign up during the enrollment period to avoid providing proof of insurability C Newly hired employees must usually satisfy a probationary period before they can enroll in the plan D Employees can enroll at any time without restriction
Employees can enroll at any time without restrictions.
Eligibility for Coverage
Employers who offer health insurance to full-time employees cannot exclude any who work at least 30 hours per week.
In a group health policy as specified by the California Insurance Code, employees added to the plan after the inception of the policy each have their own period of contestability with regard to:
Enrollment application misrepresentations and concealments
When an insurer relies on the prior claims history of the group to be insured in determining the rate to be charged, it is called:
Experience Rating
When an insurer relies on the prior claims history of the group to be insured in determining the rate to be charged, it is called:
Experience rating
Events that Terminate Coverage
Group coverage may be terminated for an employee if employment is terminated, the employee no longer meets eligibility requirements (becomes part-time) or if the group contract is terminated.
All of the following are accurate statements, EXCEPT: A In group insurance, the contract is between the employer and the insurer B In group insurance, the employer receives a Master Policy and each employee receives a Certificate of Insurance C The group must be a natural group D Group insurance normally covers occupational injury or disease
Group insurance normally covers occupational injury or disease
All of the following are accurate statements, except: A In group insurance, the employer receives a Master Policy and each employee receives a Certificate of Insurance B The group must be a natural group C Group insurance normally covers occupational injury or disease D In group insurance, the contract is between the employer and the insurer
Group insurance normally covers occupational injury or disease
Natural Group
Group that is formed for a purpose other than to obtain insurance. Insurance must be incidental to the group.
HIPAA laws apply to groups of _____ or more.
Groups of 2 or more.
What law provides the right of employees to continue health insurance coverage when changing employers by removing any restrictions against waiting periods and coverage in a new group health plan, as long as the employee has had creditable coverage?
HIPAA
An employer group health policy as specified by the California Insurance Code may provide for the exclusion or limitation of coverage for losses arising from conditions relating to all of the following, except:
Hobbies and sports related recreational activities
An employer may not discriminate against an employee while on leave under the Family and Medical Leave Act, and must provide the employee with the same benefits normally provided to an employee who is:
In the same leave or part-time status
Standard Policy Provisions
Incontestability, Misstatement of Age, Exclusions for War, Military, and Aviation Risks
Employer Self-Funded Plans are created and funded by large employers insuring the risks of the group without the backing of a(n):
Insurance company
In the event that a group health plan changes __________, employees must be fully credited with all expenses that have accumulated toward the annual deductible and/or out-of-pocket limit.
Insurers in mid-year
The Mental Health Parity Act prevents group health plans and health insurance issuers that provide mental health or substance use benefits from imposing ___________ on those benefits than on medical/surgical benefits.
Less favorable benefit limitations
Multi-Employer Welfare Associations (MEWAs)
MEWAs are generally formed by larger employers for the purpose of obtaining more favorable rates for life and health insurance. These groups can be created as fully insured, self-funded or partially self-funded benefit programs as an alternative mechanism to traditional health insurance for small employers. In order for the Department of Insurance to grant a MEWA a Certificate of Compliance, the MEWA must adhere to standards set forth in the code that are consistent with the provisions of ERISA.
A(n) _________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers information about the plan's major benefits and principal exclusions.
Master policy
Nonduplication and Coordination of Benefits
Method of determining the primary and secondary coverage when an insured is covered by more than one group plan
When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an):
Multiple Employer Welfare Association (MEWA)
ERISA Qualified Plans
Must benefit employees & beneficiaries May not discriminate in favor of highly compensated employees Must be approved by the IRS Have a vesting requirement
In a group health policy as specified by the California Insurance Code, the validity of the policy can be contested for ____________ regardless of how long it has been in force.
Nonpayment of premiums
Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans.
Overinsurance
Under the Family and Medical Leave Act, an employer must maintain the employee's existing level of health coverage (including family or dependent coverage) under a group health plan during the period of, provided the employee:
Pays his or her share of the premiums
Conversion Privilege
Period of 31 days in which the employee may, upon termination of eligibility and without evidence of insurability, convert group benefits to an individual policy. - Higher premium
All of the following are requirements that insurers may place on a group plan to avoid adverse selection, except:
Proof of insurability from each employee
A policy of group health insurance that provides hospital, medical, or surgical expense benefits must provide equal coverage to the ___________ of an employee, insured, or policyholder subject to the same terms and conditions, as provided to a spouse of the employee, insured, or policyholder.
Registered domestic partner
Which of the following might be done to protect against adverse selection when underwriting group medical insurance?
Require a minimum percentage of the group to enroll
Group blanket insurance covers a group of individuals whose membership changes frequently, such as students, passengers traveling on a common carrier, sports teams, volunteer firefighters, or other groups of people while being exposed to a(n) _______ risk:
Specific
Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act?
Termination of the employee for theft
Most private sector health plans are covered by:
The Employee Retirement Income Security Act (ERISA)
Which statement is incorrect regarding COBRA?
The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage
Noncontributory Plans
The employer to pay all premiums and 100% participation is required.
Regarding group health insurance, which is true?
The plan sponsor is issued the Master Policy
Master Policy
The policy contract issued to the employer under a Group insurance plan.
What can an employee do in order to obtain coverage when they have a pre-existing condition and find that their job was just eliminated?
Utilize the group plan's conversion privilege
Small Group Health Insurance
- 100 or fewer "full-time equivalent" employees (persons who work at least 30 hours per week). - Two part-time employees each working 15 hours per week is the equivalent of one full-time employee working 30 hours. - Small employers with 25 or fewer employees who each average less than $50,000 in annual income may be eligible for federal premium tax credits of up to 50% of the employee premium for a health plan purchased through SHOP. -
Employers with fewer than ______ employees are not required to offer continuing coverage under COBRA.
20 employees
COBRA applies to employers with:
20 or more employees
Employers who have ______ or more employees are required to offer the same health benefits, under the same conditions to employees age 65 or over and to employees' spouses who are age 65 or over, as offered to the younger employees and spouses.
20 or more employees
COBRA applies to employers with ______ or more employees.
20 or more employees.
How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA?
60 days
If an individual is age ______ or over and continues to work, Medicare is usually the secondary insurer to any employer group health plan the individual participates in.
65
Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true?
A good option for J.J. is to exercise the COBRA option under his father's group plan
A group health policy as specified by the California Insurance Code must contain a provision allowing for the adjustment of premium in the event of a misstatement of the _______ of an employee.
Age
Concerning COBRA, which of the following is correct?
Applies to employers with 20 or more employees
A group of individuals comes together with the objective of obtaining a lower collective insurance premium. This would:
Be disallowed. Group formation must be for a reason other than reducing the cost of insurance.
All of the following are ways in which an employee will lose their employer sponsored group health insurance, except:
Becoming too old while still on the job
Which of the following types of policies would a sports team purchase to obtain coverage for a season?
Blanket
What type of organization is generally formed by larger employers for the purpose of obtaining more favorable rates for life and health insurance?
Multi-Employer Welfare Associations (MEWAs)
When group health insurance is being replaced, ongoing claims under the former policy must continue under the new policy, overriding any preexisting condition exclusion. This is a requirement under which of the following?
No Loss - No Gain Statutes
Group health plans usually cover:
Nonoccupational injury or disease
Events that will cause termination of continuing health coverage under COBRA include all of the following, except:
The employee fails to convert to an individual health insurance plan on the day it is offered
Incontestability Provision
The validity of the policy cannot be contested, except for nonpayment of premiums, after it has been in force for 2 years.
A Taft-Hartley Trust would be formed to provide health and welfare benefits to which of these employees?
Union-represented
Contributory Plans
both the employees and employer contribute to the premium, and 75% participation is required.
Domestic Partners
household partnerships in which an unmarried couple lives together in a committed, sexually intimate relationship and is granted the same rights and benefits as those accorded to married couples.
