D5. Group Accident and Health Insurance

• C) Small employers in the same industry
• Multiple Employer Trusts (METs) were created for small employers in the same industry. METs group together a number of small employers, thereby creating a large group. Employees of the small employer can generally select to purchase whatever coverage they want, within what is offered by the MET.

• C) 102%
• Under COBRA, the premium cannot exceed 102 percent of the cost of the plan for similarly situated individuals who have not incurred a qualifying event, including both the portion paid by the employees and any portion paid by the employer before the qualifying event, plus 2 percent for administrative costs.

• B) The insurance company can exclude an employee with a health condition from the coverage.
• Group policies are an all-or-none coverage situation, meaning that the insurance company cannot exclude an employee from coverage. However, they can rate each employee based on their age and gender. Generally the insurance company will also require that a certain percentage of eligible employees enroll in the group policy to prevent adverse selection. For example, in a non-contributory group (employer pays 100% of the premium) the insurer may require that 100% of all eligible employees enroll in the plan. Eligibility requirements are set by the employer NOT the insurer. The insurer could also require all employees who wish to enroll take a physical exam, however, they generally don't, since they (the insurer) would have to pay the cost of the physical exam. The insurance company feels that if an individual is healthy enough to work they are an acceptable risk to insure.

• B) The contract is between the employer and the employee
• In group health insurance it is the employer who is the policy owner. The employer receives the policy, which is referred to as the master policy. The contract is between the employer and the insurer, not the employee and the employer. The employee receives a certificate of insurance, which is their evidence of group coverage.

• D) Submitting proof of the child's incapacity and continued dependency
• Family medical expense polices may include coverage for dependent children up to the limiting age, or longer if handicapped. If an insured wants to continue to provide coverage for a handicapped child beyond the limiting age, proof of continued dependency must be submitted to the insurer within 31 days of the child's attainment of the limiting age.

• B) The primary policy would provide primary coverage and the other policy would provide additional coverage, if necessary
• Coordination of benefits determines which policy is primary and which is excess. For example, the rule states that the benefits of a plan covering a person other than as a dependent shall be paid before those of a plan that covers the same person as a dependent. If the rule does not clarify which is primary and which is excess, then the benefits of the plan that covered the claimant the longest is primary.

• B) Prevent the claimant from profiting from an injury or sickness
• Coordination of Benefit (COB) Provisions are designed to prevent the insured from collecting in full from more than one insurer. Usually, under COB, one policy is primary and the other is secondary. COB Provisions only apply to group insurance, not individual.

• A) 12
• Under HIPAA, pre-existing conditions that a new group enrollee was treated for during the six-month look-back period will be covered if they reoccur after the 12-month probationary period is over. If they reoccur during the 12-month probationary period, they are not covered and never will be. However, pregnancy may not be considered to be a pre-existing condition, so pre-existing pregnancy is covered right away on group medical expense policies.

• D) May continue in the group with no change in coverage
• Employees turning age 65 who continue to work have a choice of staying with the group health insurance plan or enrolling in Medicare. If they stay in the group, Medicare is excess.

• A) Six
• Under HIPAA, a new group enrollee may only be placed on probation for pre-existing conditions that they were treated for within the six-month period immediately preceding group enrollment. This six-month period is known as the "look-back" period.

• C) Conversion Provision
• State law requires that an insured be given at least 31 days to convert their group coverage to individual coverage with the same insurance company if they quit their job or are terminated. The new coverage may not be quite as good and may cost more since it is individual coverage. Don't confuse conversion with COBRA, which is a Federal regulation that permits insureds to stay in the group up to 18 months if they pay their own premium.

• D) It requires claims to be paid proportionately
• Most group medical expense policies contain a COB provision in order to prevent the duplication of benefits when an insured is covered by more than one policy. Generally, COB provisions state which policy is primary and which is excess.

• D) Qualifying events
• COBRA is a Federal law that enables employees and their dependents to continue their group medical expense coverage for a specified period of time by paying their own premium upon the occurrence of a "qualifying" event, such as death, disability or termination of employment.

• D) No probationary period may apply to new enrollees
• New enrollees in a Small Employer Group Plan who have no prior creditable coverage may be subject to a 12-month probationary period for pre-existing conditions they were treated for during the six-month period immediately prior to enrollment. Late enrollees may be on probation for up to 18 months.

• B) Market the plan
• Employers who elect to self-fund their health insurance plans usually hire a Third Party Administrator (TPA) to perform the clerical functions of the plan, such as handling enrollments and claims. Many TPAs are actually owned by insurance companies, who provide stop-loss (or excess) coverage for the self-funded employer in the event that claims are excessive. However, TPAs are not involved in the marketing of the plan.

• B) 20
• COBRA, which stands for the Consolidated Omnibus Reconciliation Act, applies to employers with 20 employees minimum, and regulates the extension of health insurance benefits to those employees who are no longer eligible. The purpose of this federal law is to provide employees intermediary health insurance which would allow the employee to continue coverage under the group plan at their own expense until they become eligible for another group plan, or purchase individual coverage.

• D) Small group policies are guaranteed issue and may not be cancelled for any reason
• Although small employer group coverage is both guaranteed issue and guaranteed renewable under HIPAA, small group policies may be cancelled for non-payment of premium. Remember, a small group is defined as a minimum of 2 and a maximum of 50 employees. By definition, a large group contains at least 51 employees.

• B) Group insurance is essentially reduced-cost mass protection
• Large groups use rates based on claims experience. Small groups don't. Group coverage usually does not require a physical exam and often has no probationary periods. The policy is issued to the employer, while the employees receive Certificates of Insurance.

D) They have rejected COBRA HIPAA states that a person is eligible for individual medical expense insurance on a guaranteed issue basis if their most recent coverage was group, they have at least 18 months of prior creditable coverage, there is no gap between the prior group coverage and the new individual coverage greater than 63 days and they have elected and exhausted COBRA.

• C) The employee cannot be excluded from coverage because of their age
• Employers who have 20 or more employees are required to offer the same health benefits, under the same conditions, to employees and employees' spouses who are 65 years of age or older, that they offer to younger employees and spouses.The employee may accept or reject coverage under the Employer's Group Health Plan. If they accept the employer plan, it will provide their primary coverage. If they reject the plan, Medicare will provide their primary coverage.

• A) 100%
• Under a non-contributory group insurance plan, the employer pays all of the premiums, so everyone (100%) must enroll to prevent adverse selection and hold total premiums down. On contributory plans, the premium is shared by the employer and employee, and only 75% must enroll.

• D) The employer must pay 100% of the employee's premium
• Although employers may require that an employee pay 100% of the premium required to provide dependent's coverage, most employers only require that the employee pay part of the premium for their own coverage.

• D) Employees must purchase all of the coverages offered by the trust
• A MET is an alternative to group insurance designed to provide coverage for employees of small companies in the same industry who are unable to purchase true group coverage. METs may be sponsored by an insurance company (a "fully insured" MET) or may be self-funded. Each employer must enter into a "joinder" agreement that spells out the relationship between the MET and the employer and specifies the available coverages, although employees do not have to purchase all the coverages offered.

• A) The premium is fully tax deductible to the employer, and the benefits are not taxable to Seth
• On group medical expense insurance, employers may tax deduct the premiums they pay since the coverage is a fringe benefit for employees. However, benefits paid to employees are not taxable.

• D) Sister of the insured
• Generally, only the spouse and children of the employee insured can be covered as a dependent.