Group Health Insurance I Flashcards
Certificate of coverage
Contract for coverage between an insurance company and an employer.
Master policy
A master policy is issued to an employer when it purchases group health. The individual insured do not receive separate policies, instead they receive certificates of insurance and a booklet outlining the benefits.
Group vs. Individual Health Plans
A group plan:
- more extensive benefits
- higher benefit maximums
- lower deductibles
Enrollment Period
The limited period of time during which all members may sign up for a group plan.
A new member may sign an enrollment card during the open enrollment period.
Small groups vs. large groups
- small groups: 1-50 employees
- large groups: 51+ employees
Probational Period
The period of time when a new employee is in eligible for the group health insurance coverage.
A natural group
A group must be formed for reasons other than to obtain insurance to qualify for group health insurance coverage.
Qualifying groups
Employers, labor unions, trade associations, creditor-debtor groups, multiple employer trusts (employers in the same industry), lodges, etc.
Minimum number of people under a group insurance
- stipulated by state laws
- 10 is usually the lowest minimum
- temporary employees are usually not eligible for group insurance coverage
Individual eligibility
- minimum 1-3 months in employment
- full-time employment status
- employees age is 65 and above should be offered the same health benefits as the younger employees
Non-contributory
- if an employer pays the entire premium, the plan is non-contributory
- most non-contributory plans require 100% participation by eligible employees.
Contributory
- if employees pay a portion of the premium, the plan is called contributory
- most contributor plans require participation by 75% of eligible employees
Reasons for minimum participation requirement
- to protect the insurer from adverse selection
- to keep the administrative expenses in line with coverage units.
Factors determining a group health insurance premium
- The size of the group
- the claims experience with previous insurers
- the ages of group members
- the characteristics of the group as well as plan design
Self-funded
- Like electricity bill, go as you pay
- the employer assumes the financial risk for providing health care benefits to its employees
- Self-Insured employers pay for claims out-of-pocket as they are presented instead of paying a pre-determined premium to an insurance carrier for a Fully Insured plan
- Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims
- A self-funded employer may hire administrative services
Shared Funding Arrangement
- allows an employer, esp. small biz to self fund health insurance up to a limit
- select a deductible, and pay claims up to the maximum limit, after that, the insurer assumes the risk.
(more reading: https://svg.agency/explanation-shared-funding-self-funding/)
Minimum Premium Arrangement
A health insurance plan that is partly self -insured by the employer, however is fully administered by the insurance carrier. The employer pays all claims up to an agreed amount, and the carrier pays the rest.
Retrospective Premium Arrangement
- provides for retrospective determination of the policyholder’s premium obligations according to a formula based on the cost of claims actually paid by the insurance company under the policy
- calculated yearly
- the insurer collects a provisional premium payment at the beginning of the accounting period.
Pre-determined benefits
- In a group health insurance plan, the benefits of the individual insured are pre-determined by the employer based on the insurer’s benefit schedules and coverage limits
- e.g. group disability insurance tied to a position or earnings schedule.
Underwriting Practices of group health insurance
- less restrictive than individual plans
- no need for an individual to prove insurability
- Medical or physical exam not required
- because the large number of participants in a group plan reduces the probabilty of adverse selection
Guaranteed health insurance coverage for small employers
- can’t deny coverage based on the health history of group members or the category or nature of the biz
- Plans offered must include standard and essential types of benefits to all eligible employees and their dependents.
- Guaranteed renewability
A small employer with <=25 employees
- eligible for federal premium tax credits
- the employer must purchase the plan through the SHOP program to qualify for credits
Pre-existing condition in a small-group health insurance plan
- 6 months of wait period
- Pre-existing: a medical condition that can be treated or a prudent person would seek medical advice within a certain period, not exceeding 6 months
- coverage for pre-existing conditions can’t > 12 months since the insurance coverage takes effect.
Large group health insurance
- coverage not guaranteed, but guaranteed renewability
- Premium determined by past claims experience & occupational classes.