Group Health Insurance

What are the 2 parties in a group insurance contract?

Insurer & sponsoring group

What is the Certificate of Coverage?

Evidence that a member is covered by a group health insurance policy. Members receive a certificate of coverage that provides evidence of coverage, who is covered, and summarizes the benefits.

Experience Rating vs Community Rating

The premium cost is based on either:

Experience rating = based on claims history of the individual group.

Community rating = based on pooling groups (also used in rating individual insurance).

What groups are eligible for group health insurance?

• employer sponsored

• multiple employers combined

a) Multiple employer trust (MET)

b) Multiple Employer Welfare Arrangement (MEWA)

• labor unions (Taft Hartley Trust)

• trade or professional association

• lender group

a) lender is paid

b) amount insurance is no greater than the debt

What are group underwriting considerations?

• size

• composition of group

• flow of members thru the group

• plan design

• contributory = employees pay part or all of cost; minimum 75% participation

• non-contributory = employer pays entire cost; 100% participation

• persistence - employers keep the same insurer YOY expenses are reduced

• administrative capability - employers help administer the plan and use the insurer for stop-loss coverage and/or claims processing

What is the eligibility to enroll?

Everyone eligible can enroll.

• full time

• actively at work

• completed probation period (if required)

Who can enroll?

• spouse

• children younger than 26

• disabled child

When can someone enroll?

• after probationary period

• no medical questions (n/a if outside open enrollment)

• open enrollment 1x per year

• late enrollment w/ medical questions

What is “Coordination of Benefits”?

Applies when a person is covered by 2 group policies (married couples)

Primary plan - pays first

Secondary plan - pays after primary is at limit

What is the birthday rule?

Determines the primary plan for a married couple’s children. The parent whose birthday comes first in the calendar year (not the oldest).

• custody may determine primary

What are the marketing considerations?

Group policies are regulated in state where the employer has their home office.

• advertising cannot be misleading

What is “no loss, no gain”?

When changing insurers, the statutes require benefits for ongoing (disability) claims from old plant to continue to the new one. Coinsurance and deductibles count as well.

What events terminate coverage?

• employer terminates the plan

• employer didn’t pay premium

• employee quits, laid off, or reduced hours

• dependents by divorce, employee dies or employment terminated, too old.