Healthcare Lesson 5

Group Policy Grace Period

Usually extends to 31 days

Coordination of Benefits (COB)

provision that prevents an insured's total benefits from exceeding the total medical expenses or loss of wages that he or she incurs.

Under the conversion privilege of group health insurance, individuals are allowed to convert their group plans to individual plans with the same benefits, but must do so within what period of time?

31 days

While traveling cross country last winter, Marvin and 6 other passengers were injured when the bus they were on hit a patch of ice and slid into an embankment. All those injured in the accident had their medical expenses covered as a result of the bus company having what type of insurance policy?

A Blanket policy is considered to be non-specific group insurance provided when a group is constantly changing. Specific members are not listed under the policy and proof of coverage is recognized by proof of membership to the group.

Proof of Loss

A claimant has 90 days in which he or she is required to submit written documents showing 'proof of loss.' An insurer relies on receiving doctors records, accident reports and all other relevant information pertaining to the loss. In an extenuating situation, if 90 days is not realistic to submit for the claimant, he or she is allowed a maximum of one (1) year to submit proof of loss and still be accepted by the insurer.

Conversion Privilege

A group health insurance policy must allow an employee to convert his or her group insurance policy into an individual plan with the same insurer only upon leaving the group without requiring the individual to provide proof of insurability to the insurer. This conversion period is usually 31 days from the time of termination from the employer.

Group Incontestability

A health policy cannot be contested after period of time (usually 2 years). However, unlike life insurance, if fraudulent statements are made on a health insurance application, the contract can be contestable at any time unless the policy is guaranteed renewable. Another facet of this provision focuses on those individuals with pre-existing conditions. Coverage shall be provided for these conditions after this contestable clause, unless the exclusion is explicitly stated in the contract.

Multiple Employer Trust (MET)

A multiple-employer plan is established through a financial contract called a Multiple Employer Trust (MET) in which each employer joins and pays premiums towards in order to participate in the multiple-employer plan. The trust is established and managed by trustees who serve as the master policyholder and sponsor of the trust. As a small employer joins the trust, its employees receive certificates of insurance under the group health plan paid for through the trust.

Notice of Claim

A policyholder is responsible to provide the insurer with a 'written notification of claim' within 20 days of an event in which the policyholder intends to file a medical claim.

Notification Statement

A written eligibility notification, also known as a Notification Statement, must be given to employees, their spouses and any other dependents on the policy by the employer when the employee group becomes eligible for COBRA coverage, or when a qualifying event occurs. Federal law requires a 60-day period to elect COBRA coverage, after which the employee is no longer eligible.

Legal Actions

An insurance company has 60 days from the time a policyholder submits a proof of loss before legal actions can be taken against them by a policyholder. In addition, legal action cannot be brought against an insurer usually after 3-5 years from the date written proof of loss is furnished to the insurer.

Group Health Plan Sponsors

As is the case with life insurance, employer groups, unions and labor groups, associations, and fraternal benefit societies, among other plan sponsors, establish group health plans with the intention of providing members with health insurance as a benefit of employment or membership in the group. benefit levels may vary between hourly and salaried employees, management and company executives; benefit levels are based on this structure to avoid employee discrimination within the same class, or level of employment.

Blanket Customer Groups (teams, passengers and others)

Blanket insurance is non-specific group insurance provided when a group is constantly changing. Specific members are not listed under the policy and proof of coverage is recognized by proof of membership to the group. An example of a college covering all full-time students shows that due to the continual changing of the population of the group, membership to the college equates to membership under the group insurance. Similar examples are players on a sports team, executives flying in a corporate jet, or passengers on a cruise ship. Groups can be either contributory or noncontributory regarding premium payment.

Qualifying Events for 36 Months of COBRA

Coverage for surviving dependents of a deceased employee Former spouse of an employee after legal separation or divorce Dependent children that no longer qualify as dependent

Credit Health (Disability) Insurance

Credit health insurance is actually disability insurance that covers an insured's debt to a creditor upon disability. A credit health policy is issued by an insurer associated with a bank or similar lending institution and covers the amount of debt owed by a debtor over the period of time in which he or she is paying off the debt. In the event of permanent disability, the policy pays the remaining difference of what is still owed by the debtor in order to pay off the debt.

Pregnancy Discrimination Act

Enacted in 1973 as a result of the Civil Right's Act, the Pregnancy Discrimination Act, prohibits employers with fifteen (15) or more employees, as well as all state and local government employees, from discriminating against pregnant women in regards to childbirth or related medical conditions. As an exception to this law, costs associated with abortion are not required to be covered, unless the life of the mother is endangered. Under this law, pregnant employees must be able to continue to work for as long as they are able to perform their work duties, and employers are prohibited from requiring any set period of time off after childbirth before allowing the woman to return to work. Employer-sponsored health insurance must cover expenses for pregnancy-related conditions on the same basis as for other medical conditions and cannot require any additional or increased deductible amount. Employers must provide the same coverage for the spouse of a male employee as they do for the spouse of a female employee.

Individual vs. Group

Group credit insurance is more commonly maintained by larger customer groups and creditors who acquire several new debtors each year as a way of insuring against the inability of debtors to pay back debt owed to the creditor through contractual agreements. The housing and automotive industries are examples of companies who purchase credit insurance on customers while in the process of paying off home mortgages and auto loans.

Associations & Organization

Group health insurance is also common in non-employment groups including professional, civic, community organizations, alumni and professional associations, and societies such as fraternal benefit societies or other similar groups. As with an employer-related group, a trust can be established by a group of similar associations in order to increase its 'economy of scale,' or size to reduce rates for is members.

Which of the following statements regarding conversion privileges in a group health policy is INCORRECT ?

Individuals have the ability to convert their group certificate to an individual medical expense policy with any insurer.

Which Act extends COBRA continuation coverage from 18 to 29 months for eligible individuals who are disabled at the time of termination and do not qualify for 36 months under COBRA?

Omnibus Budget Reconciliation Act (OBRA)

Terms and Limitations of COBRA

Qualifying for COBRA occurs when the employee, spouse, or dependent child becomes ineligible for coverage under the group insurance. Examples include family coverage after the death of a covered employee, termination of employment or reduction of hours under full-time status, Medicare eligibility, legal separation spousal coverage, child ineligibility on the group plan, or if the employer declares bankruptcy and employment ends. Employee termination resulting from misconduct does NOT qualify under COBRA. A qualified beneficiary is considered to be anyone covered under the group policy the day before the qualifying event occurs and normally includes the employee, spouse, and dependent children.

Qualifying Events for 18 Months of COBRA

Termination of employment (most common) Hours of employment are reduced

Military Caregiver Leave

The FMLA also provides for an unpaid, job-protected leave of absence for any qualifying crisis arising out of the fact that the employee's spouse, child or parent if a covered military member on 'covered active duty.' An additional 26 weeks of leave during a 12-month period are provided to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember's spouse, child, parent or next of kin.

The Department of Labor provides 12 weeks of unpaid, job-protected coverage under FMLA for the following reasons:

The incapacity of the employee due to pregnancy, prenatal medical care or child birth as well as to care for the employee's child after birth, or adoption A serious health condition that makes the employee unable to perform the essential functions of his or her job To care for the employee's spouse, child or parent who has a serious health condition

Claims Forms

The insurer is required to furnish 'claims forms' to the insured within 15 days from the time the insurer was notified of a claim. If the insurer fails to furnish Claims Forms within 15 days, the insured can submit a Proof of Loss in any form, explaining the occurrence and extent of loss for which the claim is submitted.

Primary Insurer

The primary insurer provides coverage to the insured first, up to its policy's limits, often covering all of the insured's medical expenses.

Secondary Insurer (Excess)

The secondary, or 'excess' insurer provides coverage to the insured second, in the event that the insured's medical expenses exceeded his or her primary insurer's policy limits. The secondary insurer provides the excess amount of insurance to fully cover the insured's medical expenses.

Credit Unions

Two or more credit unions can group together and form a trust for the purpose of providing health insurance for members of each participating credit union. Similar in structure to other group trusts, credit union trusts are managed by trustees who serve as the master policyholder of the group plan, issuing certificates of insurance to credit union members. Policy premiums are paid by the trust, which is funded by premiums paid by each member covered under the group plan.

Americans with Disabilities Act (ADA)

applies to employer groups of 15 or more employees. It protects qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, and all other facets of employment. It also requires disabled employees to be given equal access to the group's health care coverage and cannot limit or exclude group health coverage for deafness, AIDS, cancer, major disease, or general disability.

Certificates of Insurance

employees are given Certificates of Insurance to provide medical coverage under the group's master contract. Group insurance is usually offered to full-time employees, 90 days after the date of hire, and the eligibility period lasts for 30 or 31 days without having to show proof of insurability.

Individual Employer Plan

established by a single employer to provide health insurance coverage for its employees. Plans are either fully insured by an insurer or partially insured by insurer, meaning that the employer assumes some risk before the insurer begins to cover any loss.

Multiemployer Plan

established by two or more employers within a related industry who are also part of a collective bargaining agreement. Unions and similar labor organizations establish multiemployer plans for the benefit of employees who may transfer between employers within the same union. Because a collective bargaining agreement exists between these employers, the group is categorized and treated as a single entity. Group size is based on whether the plan covers local members only or if it provides coverage on a larger national or international scale.

Multiple Employer Plan

established by two or more similar employers within a related industry, but who are not part of a collective bargaining agreement. The purpose of a multiple employer plan is to provide smaller employers, who are related based on the type of business or industry, with the opportunity to group together in purchasing health insurance to increase the size of the group in order to provide health insurance for employees at a more affordable rate

Omnibus Budget Reconciliation Act (OBRA)

extends COBRA continuation benefits from 18 months to 29 months for disabled employees at the time of the qualifying event or who become disabled during the first 60 days of COBRA coverage who do not already qualify for 36 months under COBRA. The Omnibus Budget Reconciliation Act (OBRA) also clarified Medicare as an 'entitlement' program which allows eligible Medicare recipients to sign up for Medicare coverage before becoming disqualified and thus losing continuing health coverage through COBRA or OBRA.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

extends group health coverage to former employees and their families for up to 18 or 36 months after termination of employment. Under this federal law, an employer group must consist of at least 20 employees. The premium rate under COBRA remains the same for the terminated individual as it was while the individual was covered under the group policy; however, the terminated employee typically begins paying the entire premium, often paying more than when he or she was covered under the group policy. Often times this increase in payment is confused for an increase in the premium rate, but in actuality, the increased amount paid by the individual is a result of the employer ceasing contributions to the individual's premium once he or she is terminated from group coverage. Under COBRA, the terminated employee is responsible for paying the entire premium rate for his or her policy.

Taft-Hartley Trust

multiemployer plan is established through a type of trust, known as a Taft-Hartley Trust, which is specific to employers who are associated through a common bargaining agreement.

Family and Medical Leave Act (FMLA)

provides 'eligible' employees with the ability to take an unpaid leave of absence of up to twelve (12) workweeks during any 12-month period for certain qualified medical, family and military reasons. An employee becomes eligible for FMLA protection upon being employed by the same employer for at least one (1) year and has worked for 1,250 hours over the previous 12 months. Under this Act, employers are required to maintain the employee's health coverage under the employer's group health plan as well as any other employment benefits in the absence of the employee. In addition, an employer must accept an employee back to the company after a qualified FMLA period of absence for the same or an equivalent job position as before taking such leave of absence.

Health Insurance Portability and Accountability Act (HIPAA)

provides for the portability of group insurance between employer group insurance plans and from an employer-sponsored plan to an individual policy if the individual becomes self-employed. HIPAA includes several common components, one of which is that a new employer must offer continual coverage to a new employee if the employee is switching from a prior employer's coverage and was insured for at least the previous 18 months on the prior group plan. Insurance portability through HIPAA is mandated for 63 days between employment periods to allow sufficient time for an employee to switch insurance coverage. Individual insurance through self-employment is considered portable from group insurance as well.

Master Contract

roup health contracts are established between an insurance company and an employer, not the employee. A Master Contract is issued to the employer

Multiple Employer Welfare Arrangements

utilized by two or more employers of similar professions or trades (but not associated through a collective bargaining agreement) who group together and form a type of multiple employer trust or other arrangement in order to provide health benefits to participating employers. In comparison to a typical multiple employer trust in which several small employers group together to purchase insurance at a lower rate as a result of the increased size of the group, MEWAs are often self-insured or partially insured arrangements.