Insurance
— Group Health Plans
The majority of people with health coverage get it through employer-sponsored group plans from their own or their spouse’s employer as part of the employee-benefits package. Although employers are not bound by law to offer health coverage, those that do often contribute toward plan premiums for their employees—some carriers require employers to pay 50 percent or more—but, again, they are not required by law to do so. If your employer does not offer health coverage or it is not adequate for your needs, group plans also can be obtained through various trade unions, professional associations and other civic and social organizations.

Laws that govern group plans differ at the state and federal levels and depending on the size and nature of the group. In California, large employers must include certain state-mandated benefits in their group plans from which small employers may be exempt because of special provisions in the state law.

The most common types of group health plans include the following:
  • Small-Employer Plans. Businesses with 2–50 eligible employees—those working full-time or at least 30 hours per week without another source for health benefits—are considered “small employers.” Small employers that offer a plan must make it available equally to all eligible employees. California state law protects small employers with a percentage cap on annual rate increases on health plans, and if a carrier discontinues a small employer’s plan for any reason, it must accept that group into another plan it offers regardless of enrollment requirements.
  • Large-Employer or Large-Group Plans. Businesses that do not meet the small-employer requirements and are not self-funded by other groups, such as churches, trade unions and professional associations, can offer a large-employer plan. Large employers can choose to offer a variety of plan options, such as PPO and/or HMO, but if a large employer offers HMO only, by law they must offer the POS addendum option. Large employers also have the option to offer class coverage, which provides benefits only to specific group of employees, such as executives, but not every employee; or they can offer different tiers of benefits to different employee classes. Within a class, however, benefits must be offered equally to all. Furthermore, employers cannot use health status as a reason not to offer coverage to a particular group and cannot exclude any employee from plan membership available to equivalent coworkers for any health-related reasons.
  • Self-Funded Plans. Most health plans offered by very large employers (more than 1,000 eligible employees) are self-funded plans, which are governed by the federal Employee Retirement Income Security Act (ERISA) and regulated by the U.S. Department of Labor under just a few federal requirements. The ERISA law enables companies with employees based in multiple states to be insured under the same plan without having to meet each state’s insurance laws. Employers choosing this option directly pay the cost of their employees’ health care rather than going through an HMO or insurance company. Self-funded plans generally provide comprehensive coverage and sometimes more extensive coverage than other plans. Self-funded plans have their own complaints and dispute resolution procedures, and unresolved issues can be directed to the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) at (866) 444-3272 or www.dol.gov/ebsa/.

Rights in a Group Plan
When issuing an employer health plan, a carrier can use health factors to determine the plan’s premium rates, but it cannot use those factors as a basis for canceling or refusing to renew the plan. In determining those rates, a carrier must accept or reject the group as a whole and cannot deny coverage or charge different rates to certain employees in a particular class or group. Large employers establish eligibility criteria for their own employee enrollment, but as previously stated these cannot be based on health factors and must apply to an entire group.

Carriers are required to give new employees at least 31 days from their hire date to enroll in the company’s group plan as well as provide an annual 31-day “open-enrollment period” so existing employees can join the plan. Special enrollment periods exist for employees experiencing life-changing events, such as pregnancy and childbirth, marriage or divorce or a court-ordered mandate for medical child support.

Premium increases must be conveyed to employers at least 60 days before it takes effect, and plans to discontinue coverage for an employer group must be made known at least 90 days in advance. With a discontinuation, the carrier must offer employers the option to purchase another employer-sponsored health coverage it offers.

— Individual Health Plans
An individual health plan bought directly from an insurance company or HMO can be a good option if you’re self-employed or your company does not offer one. It can cover an individual or can include a spouse and dependents as well. In general, individual plans cost more and often cover fewer conditions than group plans, which offer lower rates because the risk of claims is spread over more people.

Following are common types of coverage available for an individual:
  • HMO plans pay for covered health services from in-network providers or others authorized through prior referrals.
  • Major-medical policies may be offered as PPO plans and cover hospital stays and physician services in and out of the hospital.
  • Hospital-surgical policies only cover expenses directly related to hospital and surgical services, not everyday preventive care.
  • Hospital-indemnity policies pay up to a maximum fixed amount each day during a hospital stay.
  • Specified or dread-disease policies most often are offered as an extension of other individual coverage and cover only specific conditions, such as cancer or AIDS, detailed in the particular policy.
  • Short-term policies last a specified length of time, not to exceed 12 months. This mostly is meant for people who lose coverage but expect to gain it back within a reasonable amount of time.

Rights in an Individual Plan
Carriers can evaluate your medical history and other health factors when offering individual plans and can deny your application based on health factors or offer a plan with an “exclusionary rider” that eliminates benefits for certain conditions.

   
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