Group Plans

Group health insurance plans are offered through your, or a family member’s, place of employment and allows for a number of people to be covered by a single policy that is issued to their employer.

Employers that decide to provide health insurance to their employees may contact an Insurance Agent or Broker to do the legwork or he can contact an insurance carrier directly. Most insurance companies offer a wide range of coverage options that can be tailor-made to fit each employer’s "wish list" of desired coverages.

Employers can customize the plan to be anything from a traditional fee-for-service plan to one of the managed care plans. Incidental coverages like dental, vision and prescription drug coverage are also available. The final benefits that are ultimately offered to his employees are usually made up of a mixture of some or all of the following:

  • The carrier’s suggested benefits.
  • The standard coverages.
  • The state mandated coverages.
  • The employer’s list of "must haves."
  • The employee’s list of "must haves."
  • The financial needs of the company.

Healthcare coverage is expensive and employers may choose to omit a desired benefit simply because it may be cost prohibitive to the plan.

Before accepting a group, the insurance carrier will evaluate the entire group of employees as a whole; looking at ages, sex, health, occupation, avocation, lifestyle and past claims history to determine if a group is an acceptable risk. Once a group is accepted, the final benefit, coverage, premium, and eligibility issues are ironed out and the master policy is issued as a contract between the employer and the insurance company. Members of the plan are not a party to this contract.

In lieu of copies of the Master policy, members of the plan are provided with a Certificate of Coverage or a Benefit Booklet that outlines the benefits under the plan. Members of the plan will also be issued ID Cards that provide the member’s name, identification, member or group numbers as well as the insurance carrier’s telephone numbers and addresses.

Employers can choose to provide healthcare at no cost to the employees by paying the full premium or they can require that employees contribute toward the cost of healthcare by paying a portion of the premium.

New hires become eligible under the health plan after completion of the plan’s waiting period, which could happen immediately, the first of the next month, 90 days or even beyond.

Employers usually offer a period, once per year, for employees to drop, add or make changes to their existing health coverage. This period is referred to as open enrollment.

The employer is responsible for paying the full premium to the insurance carrier, usually on a monthly basis. Upon receipt of the premium, the insurance carrier will credit the employer’s account and keep each employee’s coverage active. Failure to receive the required premium may result in withholding of claim payments and/or termination of group coverage. Since this is a group plan, the actions of one affects the group as a whole. This means if only a portion of the premium is paid, the entire group will be lapsed.

The employer is also responsible for advising the insurance carrier of any new hires, terminations and/or employees that may no longer qualify for coverage due to reduced hours, COBRA members, or any other situation that may affect coverage.

The insurance company is usually responsible for maintaining correct eligibility and enrollment information, providing ID cards and plan booklets, providing customer support and processing all claims in accordance with the provisions of the plan. Remember, the plan is written and agreed to, by contract, between the insurance carrier and the employer (or his representative).

Every year, active groups go through a renewal process. During this time, the insurance carrier will look at the group’s overall claim history, experience, etc., to determine if a premium increase is warranted.

A large amount of claim activity, for example, a seriously ill employee or a pre term baby, could result in higher than average claim payments being made by the carrier. The carrier may pass this increase on to the employer in the form of a premium increase. The employer may choose to pass this increase on to his employees by increasing the amount that they contribute toward health insurance.

Although the insurance carrier may feel that a rate increase is warranted, the employer has the final option to either accept the premium increase as stated or they can shop for insurance coverage elsewhere.

Normally, employees feel that they have no choice but to accept the benefits that are provided by an employer and to accept the insurance carrier's handling of a claim. Very often, a plan fails to provide adequate benefits and/or an insurance carrier fails to provide good service, timely processing and adequate reimbursement of claims. 

Employees should always advise their Employer/Human Resources Department about inadequate benefits and poor service by the insurance company. Employers may decide to restructure the benefits or switch insurance carriers based on this feedback.

Claim disputes do arise and most can be settled by contacting the insurance carrier to appeal the handling of a claim. If the health carrier is unable or unwilling to resolve an issue to your satisfaction, you have the option of asking the patient to take this one step further.

  • For fully-insured plans- The plan member can file a complaint with the Department of Insurance (DOI) for their particular state. The DOI will work with the member and the insurance carrier to get an issue resolved.
  • For self-funded plans- The plan member can contact the Department of Labor who will work with them to try to get an issue resolved.

Back to Chapter One

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