Chapter 13: Group Health & Consumer Driven Healthcare

Group Healthcare

Covers everyone under one big policy, contributory or noncontributory structure, & specific rules to be eligible to obtain this type of coverage

Purpose of Group Eligibility Rules

Cover people who belong to the same specific group and by doing so spread the risk across a lot more people under the one policy to keep costs fair.

Natural Group Requirement

The group must be created for purposes outside of simply obtaining insurance or better rates from it being averagely underwritten

Claims Experience

Common when determining group eligibility, this is a measurement of how the people in the group act in terms of claim frequency & claim severity (cost)

Law of Large Numbers

Larger the group, the better likelihood that risk spreading is lowering the groups overall risk

Turnover History

How often people join and leave the group

Employee Retention

Indicates group stability when at a good level. More stability means that it is easier to predict the groups risk than groups that have poor history.

Shift the risk pool

New Employee changes that happen often do what…

Higher administrative costs for terminating and starting policies

High turnover in a group means what to the Insurer?

Financial Stability

A sign in Group Eligibility that tells the Insurer how much insurance a group can reasonably afford. Based primarily on the Employer’s solvency, but an Insurer can kind of grasp individual solvency based on participation and claims experience.

Full Time or Part Time

Another important factor regarding group eligibility referencing the amount of time employees work is the distinction of how many employees are…

Insurer & Group Sponsor

Group Insurance Contracts are between what parties?

Group Sponsor

Provided the Master Policy by the Insurer and agrees to the Insurance contract on behalf of the group

Individual Insureds

Receive a Certificate of Insurance acting as proof of coverage, are a part of the Group Policy and able to participate in it.

Certificate of Insurance

Contains the Name of the Individual Insured, The Insurer, Policy #, Amount of Coverage, & information on how to change beneficiaries and how to file a claim

Experience Rating

A way to assess group risk. This looks at the historic data regarding the groups overall history of insurance claims. More common to be used when underwriting groups

Community Rating

A way to assess group risk. This looks at the average of all claims within a specific area regardless of group affiliation. Able to tell the Insurer common claims within a specific area that can be indicative a claims made. Less common in group underwriting

Nonoccupational

Group Insurance normally covers ___________ injury or disease

Occupational

Workers’ Compensation covers only __________ injury or diseases

ERISA Employment Retirement Income Security Act

Federal Law that requires most groups to protect their Individual Insureds. Requires that Employers provide employees SPDs. File the SPD with the DOL. And file financial reports with the IRS

Yearly

Employers must provide SPDs to both plan participants & the Department of Labor at the same rate at which they file a financial report with the IRS, which is ______

Fiduciary duty

Plan Sponsors or Admins must follow the responsibilities under ERISA which requires them to act in the best interest of the plan and its participants

Multiple Employer Trusts (METs)

Special group forced by small or medium-sized businesses in the same or similar industry. Come together to form a large group. The Master Policy is given to a trustee and the plan is usually self-funded

Multiple Employer Welfare Agreement (MEWAs)

Two or more unrelated Employers come together to provide insurance to their workers, but strictly on a self-insured basis. Because of this status, state insurance laws do not apply, but federal laws like ERISA do. Common for small employers

Trustee

Who is issued the Master Policy in a MET

small employers;ERISA

MEWAs are more common for ______ _______, and must follow _______ guidelines

Associations

Groups that are formed for another reason than obtaining insurance, but are formed based on a commonality between each other. They must have at least 100 members and are regulated by the state in which they reside.

Associations Group

Trade groups, Professional Organizations, & School Alumni Groups that have obtained insurance are examples of what type of group?

Policyholder or the Association Itself

Who holds the Master Policy in an Association?

Blanket Insurance

Only covers accidents for specific types of groups often for events or a one-time event basis

Blanket

School Districts, Colleges/Universities, Sports Teams, Religious Groups, Volunteer Fire Departments are all able to obtain ______ insurance

Customer-Based Groups

Groups formed on a common relationship with a business to its consumers rather than being based on affiliations via employment with the business

Customer-Based

Group Credit Disability Insurance is a common form of what type of insurance group

Group Credit Disability Insurance

Common Customer-Based Group in which a borrower of money gets an insurance policy placed on their life owned by the lender in the instance the person become disabled and unable to work and thus pay the loan or debt they have financed with the debtor

Lender

Who owns the Policy & is the Beneficiary in a Group Credit Disability Insurance Plan?

The remaining loan balance

The benefit receivable to a lender in the Group disability credit insurance cannot exceed…

The loan is paid off or the Insured is able to work again

A group credit disability insurance plan once activated, pays benefits until…

Clear, complete, and written in plain language

All advertisements made by an Insurer must be…

Content, Form, & Method of dissemination

Insurers will always be held liable for what in terms of advertising?

Testimonials

When it comes to insurance advertising, this must be genuine, current, accurate, and about the policy that is being advertised

Insurers can Never Advertise

Exaggeration of Benefits to make coverage seem better than it is. Describe limitations and exclusions as though they are benefits, & create the impression that either the state of federal government endorses them

Insurer’s name & cited sources

What must always be displayed in an Ad for Insurance?

Contract Place of Delivery

Where a policy for Insurance is delivered determines what state will govern the laws to be abided by the policy

California

In the instance a company has their Headquarters in New York, but operations in California, Nevada, and New Mexico. The policy is delivered to the California office since majority of employees reside there. What state laws will govern the policy

The group has a Prescence in that state

The State of Delivery & thus overruling state insurance laws is based on what?

always allowed

Certificates of Insurance are ______ _______ to be sent to states other than the State of Delivery

Employee Eligibility

Deciding what qualifications employees must have in order to be offered benefits through an Employer and the Group Plan

Full Time Employees

Most common factor to qualify as an employee for group benefits. Often a minimum of 30 hours a week, qualifies them to be considered by underwriting for eligibility

Part Time (less than 30 hrs week) or Seasonal

What type of workers are often excluded from being offered group benefits?

Dependents

Employee’s spouse, domestic partner, and or child(ren)

Age 26

Dependent children are covered till

Provide proof of disability within 31 days prior to the child’s 26th birthday

Disabled children are allowed to continue dependent status under as group health plan past age 26, what must they do to continue coverage

are not required

Employer ____ _____ __________ to offer Dependent Coverage

Domestic partners or Civil Unions

If the state recognizes them, what other groups are allowed to be considered dependents?

Group plan costs

Average age of the group, group size, type of employment, and experience rating all are used to determine what?

Favor them

When it comes to executives or high earners, group plans must not _____ _____ in terms of plan benefits

Purpose of having enrollment periods

Avoid adverse selection by preventing people from obtaining insurance only when they need to make a claim

Probationary Period

The time period in which new employees cannot enroll in group benefits until they are employed for a certain amount of time

Open Enrollment Period

Defined period of time once a year in which current employees can sign up or change benefits without providing evidence of insurability

Late Enrollees

People that attempt to enroll in benefits after the Open Enrollment Period, they may be denied until the next OE or be allowed into the provided plan, but give the Insurer their personal Evidence of Insurability

Group Plan Designs

Offer multiple plan options, setting eligibility rules, coordinating benefits, choosing the cost share if any between the Employer and the Employee

Contributory

Both the Employer and Employee pay towards the plan. Requiring a minimum of 75% of eligible employees to enroll for a Health Insurance Plan

Noncontributory

Employer pays 100% of the plan’s premiums and all eligible employees must be included

Persistency

The Renewal Quality of a plan, in which the group prevents it from lapsing due to nonpayment or doesn’t replace the plan much.

lower

Admin costs in a group plan are typically ______ than an Individual plan

Coordination of Benefits Provision

In the event people have more than one plan covering the same type of loss, this kicks in determining what plan pays first, second, or if there is cost-sharing between the plans

Primary Plan

The plan that pays first under coordination of benefits. If a person has a plan for themselves through their own employer, this is that plan

Secondary Plan

The plan that pays after the primary plan, often coming in if the primary one has not covered a loss entirely or at all. Common for spouses or dependents that may have multiple options of coverage under different parties

Birthday Rule

For dependent children, if they are covered for the same types of losses multiple times under their parent’s plan, this comes into affect

The parent’s plan with the first birthday in the year

Whose birthday is used for determining coordination of benefits for a dependent child

Parent with custody

In the event a child has divorced parent’s, whose plan pays for the dependent’s coverage

Coinsurance and Deductible Carryover Provision

The requirement that new insurers honor the amount insureds have paid towards deductibles and coinsurance if they have changed a plan during mid-year of their policy

No Loss No Gain Law

Focuses on the continuation of coverage when group plans change, requires a replacing health insurance plan to continue paying for ongoing claims that began under the previous policy.

Extension of Benefits Provision

If a policy ends with an ongoing claim being up in jeopardy otherwise, the plan must still fulfill its obligations of any ongoing claims. Particularly applies to people that were disabled before a policy was terminated and had ongoing claims

Termination of Coverage

Happens when the employee leaves the company where they had some form of group coverage, if the employee changes work status (like switching from full time to part time), or if the group stops coverage all together

Conversion Provision

If an employee loses group coverage, it allows them to change from a group policy to an individual one. No evidence of insurability is required during this time. 31 days to do so.

It increases

If a person converts off a group plan to an individual one, what usually happens to the premium

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Federal law that mandates employers with 20+ employees offer their employees and their dependents an option to continue group coverage after experiencing a Qualifying Life Event in which group coverage would normally end otherwise

Termination (willingly or unwillingly) or change in job status

COBRA is able to be offered when what happens?

18 months

COBRA maximum continuation for employees

29 months

COBRA maximum continuation for disabled employees

36 months

COBRA maximum continuation for dependents

QLEs for Dependents to go on COBRA

Death of the employee, divorce or legal separation, the employee under the plan become Medicare eligible, or Loss of Dependent Status. All can trigger what?

14 days after a QLE

How long do employees have to be notified of their opportunity to enroll in COBRA

60 days

How long do employees have to elect to continue coverage under COBRA after being notified of the ability to do so. 

102% of the costs under the group premium

How much can premiums increase under COBRA

Life Insurance

What type of coverage is never available under COBRA

Health Insurance

COBRA only allows continuation of coverage for

The Employer

COBRA premiums get paid to 

Ending COBRA coverage

The group health plan is terminated for all employees, the person on COBRA becomes eligible for Medicare, the person on COBRA has eligibility for another group health plan. Or the person fails to make timely premium payments. All of these will result in what?

Exceeds 7.5% of their AGI

Employees that pay premiums are allowed to deduct them from they taxes if the portion they pay into them ….

They exceed the IRS daily limit or real cost of care

Benefits for LTC are taxable when…

Section 125 Cafeteria Plan

Salary reduction agreements between the employer and the employee in which the employee agrees to contribute a portion of their salary on a pre-tax basis to pay for the qualified benefits of their choosing and also any employer contributions are not taxed.

Sole Proprietors and Partners

These types of people are able to deduct 100% of their medical & dental premiums for themselves and their dependents

Health Insurance Reform

The larger effort to improve health insurance rules

HIPPA

Gave people the possibility to keep or obtain health insurance when they change jobs or leave an employer with portability of coverage, pre-existing conditions for exclusions, special enrollment rights, limiting discrimination on health status, continuation coverage requirements

Preexisting Condition Exclusions under HIPPA

Cannot exclude pre-existing conditions on a group plan for more than 12 months (18 for late enrollees)

Special Enrollment Rights

The ability for people to change or add coverage when they experience a Qualifying Life Event

Limit Discrimination based on Health Status

Plans are not allowed to discriminate against employees or dependents based on their medical conditions and or history

Continuation of Coverage Requirments

Under HIPPA this is the requirement (and also a reassurance of COBRA) that people can continue their coverage after they leave an employer if they would like to