Chapter 14 - Group Health and Blanket Insurance

Question 1

What is the purpose of a Medicare Carve-Out or Supplements?

Answer 1

They pay deductibles or copayments that are not paid by Medicare.

Question 2

Describe an Administrative-Services Only arrangement. (AKA TPA)

Answer 2

One whereby an insurer agrees to provide certain services to a self-insured entity, such as providing printed claim forms, and the processing and auditing of claims. The insurer does not provide any insurance protection under an ASO arrangement.

Question 3

What does COBRA require of employers of a certain size? (3)

Answer 3

• Employers with 20 or more employees to continue group medical insurance for terminated workers and dependents
• for up to 10 months to 36 months.
• The employee can be required to pay up to 102% of the coverage’s premium.

Question 4

Which renewal provision(s) must be included in a long-term care policy issued to an individual? (2)

Answer 4

• Noncancellable and

- Guaranteed renewable

Question 5

For coverage under a small employer health plan to be provided, what percentage of eligible workers must elect to be covered?

Answer 5

Generally at least 75%

Question 6

What is the benefit of experience rating?

Answer 6

It allows employers with low claims experience to get lower premiums.

Question 7

What is the main difference between blanket insurance and group health insurance?

Answer 7

For blanket insurance, insured members are not named. The policy is designed for groups where the membership changes frequently (like the Girl Scouts covering their kids at their camp)

Question 8

For individuals eligible for Medicare because of end-stage renal disease (ESRD) and covered under the employer’s group plan, which is the primary health provider?

Answer 8

• Group insurance for the first 30 months

- Medicare after that.

Question 9

What percentage of eligible employees must be included in a contributory health insurance plan?

Answer 9

50%

Question 10

Define Persistency as it relates to Group Insurance

Answer 10

The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer.

Question 11

Define Self-Funded Programs

Answer 11

A noninsured plan that uses a trust fund to pay for employee’s health care expenses directly.

Question 12

In group insurance, the policy is called what?

Answer 12

The master policy

Question 13

What are certificates of coverage/certificates of insurance and what does it contain? (6)

Answer 13

• Evidence of coverage
• Cannot contain provisions of statements that are unfair, misleading or deceptive.
• Tells what is covered in the policy
• Tells how to file a claim
• Tells how long coverage will last
• Tells how to convert the policy to an individual policy

Question 14

What is experience rating?

Answer 14

• Group plans are usually subject to this

- Premiums are determined by the experience of this particular group as a whole.

Question 15

What is community/pool rating?

Answer 15

• Individual policies subject to this

- Premiums are based upon the overall claims experience of the insurance company.

Question 16

What type of rating is mandatory for all medical expense health insurance sold to individuals or small groups under state law?

Answer 16

Community rating

Question 17

What percentage of eligible employees must be included if the plan is noncontributory?

Answer 17

100%

Question 18

What is a Professional Employer Organization (PEO)?

Answer 18

• Employers can hire them to handle employee management tasks, including employment benefits and payroll and workers compensation.
• PEOs achieve this by hiring the client company’s employees.
• Eventually, the employees of several companies are combined under the umbrella of a single company.
• This means the PEO can negotiate better rates on healthcare and workers’ compensation coverage.

Question 19

What are the requirements for an Association Group to be able to buy group insurance for its members? (6)

Answer 19

• 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
• Have by-laws
• must hold at least annual meetings.

Question 20

New York law allows what types of groups to provide blanket accident and health policies for their respective constituents?

Answer 20

1. Railroad, steamship, motorbus, or airplane
2. Employees exposed to exceptional hazards
3. Schools and camps
4. Volunteer fire departments
5. Associations

Question 21

Under ERISA, all forms of health care, life insurance, prepaid legal services, and disability insurance are considered ________ _________ _________ plans.

Answer 21

Under ERISA, all forms of health care, life insurance, prepaid legal services, and disability insurance are considered EMPLOYEE WELFARE BENEFIT plans.

Question 22

What type of benefits are not considered an employee welfare benefit? (3)

Answer 22

• Unfunded benefits
• Payroll practices (vacation, holidays, overtime premiums, holiday gifts, and compensation paid for time not worked)
• Group-type voluntary insurance programs (where employer makes no contribution)

Question 23

ERISA treats as pension plans what types of retirement plans? (3)

Answer 23

• Any form of DC such as PSP, stock purchasing, savings and thrift plans
• Pension plans
• A bonus plan, payment of which is systematically deferred and paid out over several years

Question 24

What type of retirement benefits are not regulated by ERISA?

Why?

Answer 24

• Cash bonus plans
• Cash profit-sharing plans
• Severence pay of less than 2 years

Because they are considered compensation.

Question 25

What type of employee benefit is subject to all ERISA rules like reporting and disclosure, financial management of benefit plan assets, administration of benefit plans, and participation, vesting, and funding requirements?

Answer 25

Pension plans

Question 26

What ERISA rules are welfare plans subject to? (3)

Answer 26

• RREPORTING and disclosure rules
• FINANCIALmanagement standards
• Plan ADMINISTRATION standards.

Question 27

What federal agencies are involved in administering ERISA rules and which do they administer? (3)

Answer 27

1. IRS - Taxation of contributions and benefits. In the retirement-plan area, they enforce funding, participation, and vesting standards
2. Pension Benefit Guarantee Corporation - In charge of pension insurance provisions
3. US Department of Labor - Administers reporting and disclosure and the fiduciary requirements of ERISA that regulate the management of plan assets.

Question 28

Under the Family Medical Leave Act of 1993, an eligible employee is entitled to what for an eligible reason?

Answer 28

A total of 12 workweeks leave during any 12-month period

Question 29

What reasons under FMLA are employees eligible for leave? (4)

Answer 29

1. The birth of a child of the employee in order to care for that child
2. The placement of a child with the employee for adoption or foster care
3. The care of the employee’s spouse, a child, or parent who has a serious health condition
4. Because of a serious health condition that makes the employee unable to perform the duties of their position.

Question 30

Except if the employee takes leave on an intermittent or reduced-level schedule, any eligible employee who takes leave under the FMLA is entitled upon return from leave to be restored to what? (2)

Answer 30

• The position of employment held when the leave began, or

- An equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.

Question 31

For individuals covered under a group plan and Medicare, for who is the group plan primary and Medicare secondary? (2)

Answer 31

1. For individuals who are age 65 or older and
   - Currently employer (or insured under a working spouse’s group plan)
   - Working for an employer who has 20 or more employees
2. For individuals who are under the age of 65 and disabled, and
   - Currently employed (or insured under a working spouse’s group plan)
   - Working for an employer that has 100 or more employees

Question 32

For individuals covered under a group plan and Medicare, for who is Medicare primary and the group plan secondary?

Answer 32

For individuals who are age 65 or older and:

• Currently employed (or insured under a working spouse’s group plan)
• Working for an employer who has fewer than 20 employees.

Question 33

The avoid nondiscrimination rules violations, and determine the number of employees in the top-paid group (highly-compensated employees), what employees must be EXCLUDED from coverage? (5)

Answer 33

1. Have not completed 6 months of service
2. Normally work fewer than 17.5 hours per week
3. Normally work during no more than 6 months per year
4. Are under the age of 21, and
5. Included in a unit of employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and the employer, except to the extent provided in regulations.

Question 34

Highly compensated individual means any employee who what? (2)

Answer 34

• Owned more than 5% of the interest in the business at any time during the year or the preceding year (regardless of the employee’s compensation), or
• For the proceeding year, received compensation from the business in excess of a specified dollar amount ($130k for 2021), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation.

Question 35

Describe a Fully-Insured Plan

Answer 35

• Is Administered and Guaranteed by an insurance company
• In return for the premium collected from the insured by the insurer, the insurer assumes the risk of paying the cost of medical expenses that may or may not occur ding the policy period.

Question 36

Describe Stop-Loss Coverage

Answer 36

• Type of funding in an insurance policy that contains a provision that coverage is only activated upon the insured’s losses reaching a certain level (known as a partially-funded plan).
• It may take the form of a maximum aggregate limit payable or a maximum limit payable for any one event.

Question 37

For groups covering employees in multiple states, how is it decided what state law has jurisdiction over the policy?

Answer 37

Generally, the state in which the coverage was delivered would have jurisdiction.

Question 38

New York law forbids health insurance companies from rejecting applications because of what?

Answer 38

Health reasons

Question 39

Health underwriters for group plans generally look at what to help establish group rates?

Answer 39

The employer’s financial standing and credit rating.

Question 40

What is considered when underwriting group health insurance? (6)

Answer 40

1. Certificates are guaranteed issue with no individual underwriting
2. Premiums are determined by age, sex, and occupation of the entire group.
3. The reasons for forming the group are other than purchasing insurance
4. A certain participation level must be maintained.
5. There is a flow of new members through the group, and
6. There is an automatic determination of benefits which is not discriminatory (everyone has the same coverage).

Question 41

In groups of at least what size can medical information not be required of plan participants?

Answer 41

In groups of 50 or more

Question 42

In health insurance, persistency is important for what reasons? (2)

Answer 42

• Expenses are higher during the first year than in subsequent years because of the costs of issuing the policy and certificates of insurance, and higher first-year commissions, and
• Claim rates usually increase as the age of the insured increases.

Question 43

What are the two common eligibility requirements in order to be eligible to participate in the group plan?

Answer 43

• Employee must be full time (usually 30 hours per week)

- Employee must have been employed by the employer from 1 to 3 months.

Question 44

How long is the annual open enrollment period for group insurance?

Answer 44

30 days.

Question 45

What did the ACA put into law about eligibility?

Answer 45

• Employers must extend coverage to all employees who work more than 30 hours per week.
• Small and large employers may not be denied coverage for failure to satisfy the minimum participation or contribution requirements.

Question 46

Employer group health insurance generally requires a dependent of an employee to be what: (3)

Answer 46

• A spouse (most insurers cover domestic or same-sex partners)
• A child younger than the limiting age, including natural children of the insured, stepchildren, children legally placed for adoption, and legally adopted children, and/or
• Disabled children who are incapable of self-support because of a physical or mental disability, and are dependent upon the insured for support and maintenance

Question 47

What is the NY law about the continuation of coverage? (4)

Answer 47

• All employers with health plans must offer a 6-month continuation of the current health plan to terminated employees and their dependents.
• The employee must elect the continuation privilege within 30 days
• Employee is responsible for the full premium payment for the coverage
• After the 6-month period, a conversion privilege must be offered to the employees (doesn’t have to be as comprehensive as the group plan)

Question 48

What are the qualifying events under COBRA that allows coverage to be extended for up to 18 months? (3)

Answer 48

• Voluntary termination of employment
• Termination of employment for reasons other than gross misconduct
• Employment status change: from full-time to part-time.

Question 49

How long does a terminated employee have to exercise extension of benefits under COBRA?

Answer 49

60 days.

Question 50

For what events is the period of coverage 36 months under COBRA for dependents? (2)

Answer 50

• Death of an employee

- Divorce of legal separation

Question 51

In the event that insurance ends because the policy has been terminated or the insured is no longer employed or in the class eligible for coverage, any group policy providing hospital or surgical expense insurance (but not including insurance against specific diseases or accidental injury only) must provide what?

Answer 51

A conversion privilege

Question 52

What does conversion privilege entitle an insured employee to do?

Answer 52

Covert to an individual policy within 60 days without evidence of insurability. The insurer has the option of providing coverage under a group insurance policy rather than issuing a converted individual policy.

Question 53

Besides the employee who else will the conversion privilege also be available to? (3)

Answer 53

• The surviving spouse and children covered by the group policy after an employee’s death
• Children covered by the group policy once they reach the limiting age, and
• The former spouse of the employee in the case of divorce or annulment.

Question 54

What is Basic Care?

Answer 54

• A managed plan developed in conjection with the Health Benefit plan committee.
• It is lower in cost than the Standard Benefit Plan

Question 55

The catastrophic care benefit must provide what?

Answer 55

Necessary coverage in the event of catastrophic illness or injury.

Question 56

What actions are insurers allowed to take that affect the availability of coverage? (8)

Answer 56

1. Cover only certain classes of employees based on conditions pertaining to employment, but only if the employer requesting coverage seeks coverage for those classes
2. Establish a required time period of employment before coverage under the employer’s plan takes effect
3. Require a number of work hours to qualify as an employee, not to exceed 20 hours per week
4. File overinsurance rules with the Health and Life Policy Bureau and get the Superintendent’s approval.
5. Establish rules, if more than one health care plan is available, controlling the transfer between the health care plans as long as the transfer is permitted at least one time each calendar year.
6. Limit enrollment to a specified time period if an eligible employee or dependent rejects initial enrollment
7. Limit changes in coverage to an anniversary date or other regular interval (must be every 12 months or less)
8. Limit eligibility if a small group has had health insurance coverage terminated within the previous 12 months for failure to pay premiums

Question 57

If an employee terminates their employment, what provision would allow them to continue health coverage under an individual policy, if requested with 60 days?

Answer 57

Conversion provision.