Group Health Insurance

Characteristics of Group

one of the differences between group underwriting and individual underiting is that in groups of 50 or more, medical information cannot be required of plan participants

Labor Unions

A policy issued to a labor union, or similar organization to insure members of the organization for the benefit of persons other than the union or organization are subject to the following requirements: the members eligible for insurance under the policy shall be all the members of the union or organization, or all of any class or classes thereof; the premiums for the policy shall be paid either from funds of the union, or from funds contributed by the insured members specifically for their insurance, or from both. A policy on which no part of the premiums is to be derived from funds contributed by the insured members specifically for their insurance must insure all elgible members, except those who reject such coverage in writing; an insurer may exclude or limit the coverage on any person as to whome evidence of individual insurability is not satisfactory to the insurer

Events that terminate coverage - for employees

employment terminates, the employee ceases to be eligible, the date the overall maximum benefit for major medical benefits is received, teh end of the last period for which the employee has made the required premium payments comes about, the master contract is terminated

coordination of benefits provision

the COB provision establishes which plan is the primary plan, or the plan that is responsible for providing the full benefit amounts as it specifies. Once the primary plan has paid its full promised benefit, the insured submits the claim to the secondary, or excess, provider for any additional benefits payable (including deductibles and coinsurance). In no case will the total amount the insured receives exceed the costs incurred or the total maximum benefits available under all plans. If all policies have a COB provision, the order of payments is determined as follows: if a married couple both have group coverage in which they are each named as dependents on the others policy, then the person's own group coverage will be considered primary. The secondary coverage will pick up where the first left off.; If both parents name their children as dependents under their group policies, then the order of payment will usually be determined by the birday rule, i.e. the coverage of the parent whose birthday is earlier in the year will be considered primary. Occasionally the gender rule may also apply, according to which the father's coverage is considered primary. If the parents are divorced or separated, the policy of the parent who has custody of the children will be considered primary

Persistency factors

the underwriter takes persistency into consideration because groups that change insurance companies every year do not represent a good risk

dependent eligibility

Employer group health insurance generally requires a dependent of an employee to be a spouse; a child younger than 19, which includes stepchildren, children legally placed for adoption, and legally adopted children; unmarried children between the ages of 19 and 23, provided that they are full-time students; or unmarried disabled children older than 19 who are incapable of self-support as the result of disability or mental retardation

Experience Rating VS. Community Rating

Group health insurance is usually subject to experience rating, where the premiums are determined by the experience of this particular group as a whole.

Insurer Underwriting Criteria

The following are considered in group health insurance underwriting: certificates are guaranteed issue with no individual underwriting; premiums are determined by age, sex, and occupation of the entire group; teh reasons for forming the group are other than purchasing insurance; a certain participation level must be maintained; there is a flow of new members through the group; there is an automatic determination of benefits which is not discriminatory

Certificate of Coverage

The individuals covered under the insurance contract are issued certificates of insurance, as evidence of coverage

Reinstatement of coverage for Military Personnel

US armed Forces reservists called to active duty after August 21, 1990, who were covered under a disability policy provided by their employers, have a right to reinstate such coverage upon release from active duty if they apply within 90 days of discarge or 1 year after hospitalization continuing after discharge. Coverage must be the same as is offered to other employees at the time of application and can exclude conditions arising as a result of military duty

Employment Related Groups

With an employer-sponsored group, the employer (a partnership, corporation, or a sole proprietorship) provides group coverage to its employees

Multi-Employer Trust (METs) or Welfare Arrangements (MEWAs)

A multiple-employer trust (MET) is made up of two or more employers in similar or related businesses who do not qualify for group insurance on their own. In situations like this, several small companies banded together to create a large pool of people so that the insurance company will provide coverage. This group of employers jointly purchase a single benefits plan to cover employees of each separate employer. A Multiple employer Welfare Arrangement (MEWA) is similar to a MET, except that MEWAs are groups of employers that pool thier risks in order to self-insure

Plan Design Factors

The same as group life insurance, group health insurance may be either contributory or noncontributory. With a contributory plan the eligible employees contribute to payment of the premium (both the employee and employer pay part of the premium). If a plan is contributory, at least 75% of all eligible employees must participate in the plan. If the plan is noncontributory, 100% of the eligible employees must be included, and the participants do not pay part of the premium. The employer pays teh entire premium. The reason for these participation requirements is to guard teh insurer against adverse selection and to reduce administrative costs.

annual open enrollment

a 30-day open-enrollment period is available once a year to employees who reject coverage during the inital enrollment period and later wish to have cover or to add dependent coverage

Characteristics of Group Insurance

for a group policy, the contract is between the insurance company and the employer, union, trust, or other sponsoring organization as opposed to the individual policy where the contract is between the insurance company and the insured

Group Contract

in group insurance the policy is called the master policy and is issued to the policyowner, which could be the employer, an association, a union, or a trust

Defined groups

in order to qualify for group coverage, the group must be formed for a purpose other than obtaining group health insurance

Associations

an association group can buy group insurance for its members. The group must have at least 100 members, be organized for a reason other than buying insurance, have been active for at least two years, have a constitution, by-laws, and must hold at least annual meetings

eligibility for coverage

group health plans commonly impose a set of eligibility requirements that must be met before an individual member is eligible to participate in the group plan

events that terminate coverage - for dependents

the dependent fails to meet the definition of a dependent, the date the overall maximum benefit for major medical benefits is received, the end of the last period for which the employee has made ther equired premium for depend coverage passes

Individual Employer Plans

the individual employer normally will cover all full time employees

Administrative Capability

the per capita administrative cost in group health insurance is less than administrative cost found in individual coverage