Unit 18 - Group Health Insurance

Question 1

Certificate of Coverage

Answer 1

Individual members, participants in a group plan receive this as evidence of coverage.

Question 2

The premium cost for a group insurance plan is based on

Answer 2

Experience Rating - based on claims history of the individual group
Community Rating - based on pooling groups

Question 3

Master Contract

Answer 3

Sponsor receives this as evidence of insurance for the group.

Question 4

Multiple Employer Trust (MET)

Answer 4

a group of small employers in the same industry who either form together in order to purchase group insurance as one entity or self-fund a plan.

Question 5

Multiple Employment Welfare Arrangements (MEWAs)

Answer 5

provide health and welfare benefits to two or more unrelated employers.

Question 6

Labor Union

Answer 6

a labor union may sponsor a group insurance plan for it’s members, or two or more labor unions may join together to provide group insurance for their collective members. Labor Union plans are sponsored under a Taft-Hartley Trust.

Question 7

Association Group Plans

Answer 7

A trade, professional, or other type of association may sponsor a group plan for its members.

Question 8

Group Credit Disability Insurance

Answer 8

a lender, or creditor, may sponsor a group health (disability) insurance plan for its group of debtors.

• this is payable to the sponsor
• the amount of coverage is limited to the amount of the insured’s debt.

Question 9

Group underwriting

Answer 9

• Size of the group - larger groups can more llikely avoid adverse selection
  
  • Small group 2-50 lives, Large group = 51+ lives
• Composition of the group - age, gender, income of the members
• Flow of members through the group - individuals joining and leaving the group on a regular basis reduces the risk of adverse selection.
• Plan design - what will be covered and for how much
• Contributory or Noncontributory
  
  • Contributory - employers pay part of the cost and at least 75% of those eligible must participate in the plan
  • Noncontributory - employer pays the entire cost of the plan and 100% of eligible employees must participate
• Persistency - when the employers keep their group coverage with the same insurer year after year
• Administrative capability - larger groups can lower premium costs by helping administer the plan and use the insurer for stop-loss coverage and/or claims processing

Question 10

Dependent Eligibility

Answer 10

Coverage must also be made available to participating employee’s spouse or children up to age 26

Question 11

Probationary Period

Answer 11

New employees must wait before they can enroll in an employer’s group health insurance plan. Typically 1-6 months.

Question 12

Eligibility Period

Answer 12

When the probationary period ends, new employees can enroll in the group plan during the eligibility or enrollment period, which is typically 30 or 31 days.

Question 13

Open Enrollment

Answer 13

Most states require insurers to also offer an open enrollment period every year. Individuals who declined coverage during the initial eligibility period can enroll in the plan during this period without having to provide evidence of insurability.

Question 14

Late enrollees

Answer 14

Individuals who want to enroll for coverage at any time other than the initial eligibility period or annual open enrollment may be required to provide evidence of insurability.

Question 15

Events that Terminate Coverage

Answer 15

• The employer discontinues the plan or discontinues coverage for a certain class of employees
• The group policy lapses because the employer didn’t pay the premium
• The employee (and/or dependents) coverage lapses because they didn’t pay the premium
• A covered employee quits, is laid off, or they lose their full time status
• A spouse and children lose connection to the plan due to divorce or the employee dies, terminates employment or otherwise become ineligible for coverage
• A non-disabled dependent child reaches age 26

Question 16

Extension of Benefits

Answer 16

Requires, by state laws, that benefits paid by an in-force policy continue after the policy is terminated. Some states require an extension of benefits to a totally disabled member at the time of policy discontinuance.

Question 17

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Answer 17

is a federal law that requires employers with 20 or more employees to allow former employees and their dependents to continue benefits provided by the employer’s group plan

• Coverage may continue for 18-36 months
• Employees or dependents must pay the enire premium for the coverage
• COBRA specifies rates, coverage, qualifying events, qualifying beneficiaries, notification procedures, and time of payment requirements.

Question 18

COBRA Qualifying Events

Answer 18

• death of covered employee
• termination of covered employee, except for gross misconduct
• reduction of work hours of a covered employee
• Medicare eligibility for a covered employee
• divorce or legal seperation of a covered employee
• termination of child’s dependent status
• bankruptcy of the employer

Question 19

COBRA Qualified Beneficiary

Answer 19

Any individual covered under an employer-maintained group health plan on the day before a qualifying event. Usually includes:

• covered employees
• spouse
• dependent children, including children born or adopted in the first 18 months of the benefit continuation period

Question 20

COBRA Notification Statements

Answer 20

Employers must provide notification statements to individuals eligible for COBRA continuation within 14 days

• Must be provided when:
  
  • a plan becomes subject to COBRA
  • an employee is covered by a plan subject to COBRA
  • a qualifying event occurs

The option to elect continuation expires 60 days after an individual receives the notification.

Question 21

COBRA Duration of Coverage

Answer 21

• 18 months - the maximum period of coverage continuation for termination of employment or reduction in hours of employment
• 30 months - for all other qualifying events

Question 22

COBRA Disqualifying Events

Answer 22

• first day a premium is overdue
• the date the employer ceases to maintain any group health plan
• the date on which the individual is covered by another group plan
• the date the individual becomes eligible for Medicare

Question 23

Omnibus Budget Reconciliation Act of 1989 (OBRA)

Answer 23

OBRA extended the minimum COBRA continuation coverage period to 29 months for qualified beneficiaries disabled at the time of termination. The disability must meet the Social Security definition of disability.

The plan can charge a qualified beneficiaries an increased premium up to 150% of the group premium, during the 11 month disability extension (months 19-29)

Question 24

HIPPA - Health Insurance Portability and Accountability Act

Answer 24

• Preexisting conditions
• Creditable coverage
• Mandated Benefits HIPPA
• Privacy Disclosures

Question 25

HIPPA - Preexisting Conditions

Answer 25

A group health plan may not define a preexisting condition more restrictively than:

A condition in which medical advice, diagnosis, care, or treatment was recommended or received during the six months prior to the enrollment date in the plan.

A preexisting condition can be excluded for up to 12 months (18 months for late enrollee)

Question 26

HIPPA - Creditable Coverage

Answer 26

As long as there is not a break in creditable coverage of 63 or more days, an individual’s prior creditable coverage reduces the maximum preexisting contition exclusion period that the new group health plan can apply to that individual.

Question 27

HIPPA - Mandated Benefits

Answer 27

• Guarantees coverage for 48 hour hospital stay for new mothers and their babies after regular delivery, 96 hours for cesarean section birth
• Expands coverage for mental illness by requiring similar coverage for treatment of mental and physical conditions
• Small employers cannot be denied group health insurance coverage because one or more employees are in poor health.

Question 28

HIPPA - Privacy Disclosures

Answer 28

Imposes specific requirements on health care providers, insurers, and producers with respect to the privacy of the insured’s health and medical information

• The applicant must be given notice of the following
  
  • the insurer’s privacy practices
  • the applicant’s rights to maintain privacy
  • the applicant’s opportunity to opt-out
• The producer must provide the applicant with the Notice of Insurance Information Practices

Question 29

A state law that requires benefits that began to be paid while a health insurance policy was in force to continue to be paid after the policy is terminate is known as

Answer 29

Extension of benefits