Unit 18: Group Health Insurance

Question 1

experience rating

Answer 1

premium cost for group insurance is based on this

a method of establishing the premium on the group’s previous claims experience.

The larger and more homogenous the group, the closer it comes to reflecting standard morality and morbidity rates

Question 2

community rating

Answer 2

sets premium costs by using the same rate structure for all subscribers to a medical expense plan, no matter what their past loss experience has been.

Question 3

Eligible Groups

Answer 3

• groups can’t exist solely for the purpose of buying insurance
• employer sponsored

-multiple employers combined
+multiple employer trust (MET)
+multiple employer welfare arrangement (MEWA)

• labor unions - Taft Hartley Trust
• Trade or professional association

-Lender group
+lender is paid
+amount insurance no greater than the debt

Question 4

Group Underwriting Considerations

Answer 4

• size of the group
• composition of the group
• flow of members through the group
• plan design

-contributory or noncontributory
+contributory - employees pay part or all of the cost (minimum 75% participation)
+noncontributory - employer pays entire cost (100% participation)

• persistency
• administrative capability

Question 5

coordination of benefits

Answer 5

• working couples may both have insurance
• primary plan pays first up to its limit and then secondary play pays excess
• applies when a person is covered by two group policies
• employee plan is primary

Question 6

Marketing considerations

Answer 6

• group policies are regulated in state where employer has their home office
• advertising may not be misleading
• group policy is regulated in the sate where employer has office

Question 7

no loss, no gain

Answer 7

state statutes that requires benefits for ongoing (disability) claims that started under an old plan to continue without imposign the new plan’s eligibility requirements

Question 8

Termination of Group Coverage

Answer 8

• employer terminates the plan
• employer didn’t pay the premium
• employee quits, laid off, reduction in hours
• dependents: divorce, employee dies, employee employment terminated, too old

Question 9

COBRA/OBRA

Answer 9

• federal law if you have 20 or more continued employees
• 18-36 months of continued coverage
• employers must allow employee or dependents to remain on the group plan
• applies to medical and dental NOT life insurance
• extends coverage for 18 months if employees employment is terminated or reduction in hours
• extends coverage for 36 months if dependents no longer qualify due to divorce, too old, death
• premium is 102% of regular group premium, employer does not contribute anymore
• _____ automatically ends: premium not paid, employer stops the group plan, individual becomes covered by another plan, individual becomes eligible for Medicare
• OBRA - 29 months if disabled at time of termination

Question 10

HIPPA

Answer 10

• mandated benefits for small employers, self-employed, pregnant women, mentally ill
• pre-existing conditions
• includes most health coverage
• guaranteed 48 hour hospital stay for new mothers after regular delivery and 96 hours for C-section
• small employers cannot be denied