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Recap of Chapter Thirteen

  1. Group health insurance is issued under a single contract that covers multiple individuals, most commonly in an employment setting. The sponsor receives the Master Policy, while covered individuals receive a Certificate of Insurance or Outline of Coverage that summarizes key benefits and exclusions. 13.1
  2. Comparisons with products from other insurers must be accurate, complete, and not misleading. Any advertisement featuring the products or services of a specific insurer must clearly state the insurer’s full name. 13.3
  3. Most group health insurance plans include a Coordination of Benefits (COB) provision, which explains how the plan will coordinate with other applicable coverage for an individual. 13.4
  4. A COB provision generally designates the employee’s plan as primary and a spouse’s plan as secondary when coverage exists under both plans. The purpose of this provision is to prevent overinsurance. 13.4
  5. Primary coverage for children under two group health plans is typically determined by the “birthday rule,” which states that the plan of the parent whose birthday (month and day) occurs first in the calendar year provides primary coverage. 13.4
  6. Because group insurance is not individually underwritten, the entire group is treated as a single risk unit. Group plans are prohibited from discriminating in favor of executives or other highly compensated individuals. 13.5
  7. The cost of a group health plan is influenced by factors such as the size of the group and its claims history. Experience rating uses a group’s past claims to estimate future costs, while community rating determines premiums based on the average cost of care within a specific geographic area. 13.5
  8. Contributory health plans, in which employees share in the cost, generally require at least 75% participation from eligible employees. Noncontributory plans, fully funded by the employer, must include 100% of eligible employees. 13.5
  9. State extension of benefits laws may require a new insurer to assume responsibility for ongoing claims when coverage is replaced. If not required, claims incurred under the prior policy must continue to be covered by that policy. 13.6
  10. If a group health plan is terminated and not replaced, extension of benefits provisions require that claims in progress at the time of termination continue to be covered until treatment ends, benefits are exhausted, or the insured dies. 13.6
  11. When COBRA does not apply, or when continuation coverage ends, covered individuals have the right to convert to an individual policy with the same insurer without providing evidence of insurability or being subject to pre-existing condition exclusions. The conversion election must be made within 30 days of the qualifying event. 13.6
  12. If group coverage is terminated, any covered individual who is disabled or receiving benefits at the time of termination will continue to receive benefits under the policy until the claim ends, the maximum benefit is reached, or the individual dies. 13.6
  13. Group health plans covering 20 or more full-time employees are subject to COBRA requirements. If an employee experiences termination (for reasons other than gross misconduct) or a reduction in hours, the employee and eligible dependents may continue coverage under the group plan for up to 18 months. This period may be extended to 29 months if the individual is disabled at the time of the qualifying event. The employee is responsible for paying the full premium, up to 102% of the cost. 13.7
  14. COBRA also allows dependents to continue group coverage for up to 36 months in the event of the employee’s death, divorce or legal separation, Medicare eligibility, or when a dependent child loses eligibility (such as reaching age 26). The election to continue coverage must be made within 60 days of the qualifying event. 13.7
  15. Employers are required to notify employees of their COBRA continuation rights both at the time of enrollment in the health plan and upon termination of employment or reduction in work hours. Failure to provide timely notice may extend the period for electing continuation coverage. For other qualifying events, dependents are responsible for notifying the employer and electing continuation coverage. 13.7
  16. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to provide protections for individuals with pre-existing conditions when changing jobs. Prior to HIPAA, individuals could face exclusions for pre-existing conditions when enrolling in a new employer’s group health plan. 13.8
  17. For HIPAA protections to apply, there must be no break in coverage exceeding 63 days. 13.8
  18. Worksite plans are designed to complement, supplement, or enhance employer-sponsored benefits. Available coverage options may include disability income, accidental death and dismemberment, long-term care, critical illness or dread disease, as well as discount dental and vision plans. 13.11
  19. When group health insurance is replaced within 60 days of the termination of a prior plan, state “extension of benefits” laws require the new policy to cover all employees and dependents previously covered, as well as those who were eligible but not yet enrolled (such as individuals waiting for an open enrollment period). 13.11