Group Health Insurance Continued

Conversion

This was also discussed in chapter 24. All group health plans issued in Florida must allow for the conversion of benefits to an individual plan regardless of the reason of termination of the employee, so long as the member has been continuously insured under the group policy for at least three months immediately prior to termination.

The only way an employee will not be issued a converted policy is if:

• termination of the group insurance occurred because of failure to pay the premium (so the policy lapsed and therefore there is nothing to convert anyway); or
• because the group coverage was replaced by similar group coverage within 31 days after discontinuance (so you're already covered under another group plan and don't need the conversion).

The application to convert and first premium must be paid to the insurer, not later than 63 days after termination of the group policy. The same rules of conversion apply as we have discussed in previous chapters:

• The individual will be covered by the same insurer.
• The premium for the converted policy will be higher than it was previously under the group.
• The converted policy must be issued without evidence of insurability.

The premium for the converted policy may not exceed 200% of the standard risk rate.   The effective date of the converted policy will be the day following the termination of insurance under the group policy.  The insurer may choose to provide group insurance coverage instead of issuing a converted individual policy.

Coordination of Benefits *****

A group policy issued in Florida must include a coordination of benefits provision.  Just as has been discussed previously, the total of coverages under all combined policies may not exceed 100% of the total reasonable expenses actually incurred, and so benefits may be reduced or excluded under a policy if paying those benefits would exceed the total expenses. In other words, you will never make money from a health claim.

If an individual is covered under more than one group policy and both policies include coordination-of-benefits provisions, the following rules determine the order in which benefits would be paid:

• The benefits of a group policy covering an individual are determined to pay before those of the policy or plan that covers that same individual as a dependent.
• If the person is also on Medicare, the order of benefits is:
  • first, benefits of a plan covering a person as an employee, member, or subscriber;
  • second, benefits of a plan of an active worker covering a person as a dependent; and
  • third, Medicare benefits.

  Example: Joe Blow has recently enrolled in Medicare A, he is covered by his employers plan and also as a dependent on his wife's group plan through her job. He has recently suffered an occupational injury that puts him in the hospital for several months. The coordination of his benefits would be the following

  1. Worker's Comp (when it says "occupational injury" that means it happened on the job and you assume Workers Comp pays first)
  2. his group plan
  3. his wife's group plan
  4. Medicare A
• If two or more policies or plans cover the same child as a dependent of different parents:
• first, the benefits of the plan of the parent whose birthday falls earlier in a year and second, the benefits of the plan of the parent whose birthday falls later in that year;
• if both parents have the same birthday, the benefits of the plan that covered the parent for a longer period of time pay first and second, the plan that covered the parent for a shorter period of time.

Example: Mom's birthday is January 13 and Dad's birthday is May 10. Dad's coverage is much better than Mom's and Dad has been covered on his plan longer. However, the primary payor for the child would be Mom's coverage simply because her birthday is earlier on a calendar.

• If two or more policies or plans cover a dependent child of divorced or separated parents, benefits for the child are determined in this order:

• First, the policy or plan of the parent with custody of the child
• Second, the policy or plan of the spouse of the parent with custody of the child
• Third, the policy or plan of the parent not having custody of the child

Coordination of benefits is not permitted against the following types of plans (meaning each of these plans would pay their full amount):

• an indemnity-type policy, ( a policy that pays a daily amount for each day you're in the hospital. You can have as many of them as you want)
• an excess insurance policy,
• a policy with coverage limited to specified illnesses or accidents, or
• a Medicare supplement policy.

E.R.I.S.A - Employee Retirement Income Security Act*****

Some employer-based health plans may be federally regulated under ERISA, as well as being regulated by state laws. Without getting too deep into this, a true ERISA health plan appears to have the same benefits as state regulated group health plans but they are usually for unions and are regulated at the federal level. The state STILL regulates the insurance company. This falls under something called "preemption". There is also something called a "savings clause".

Don't worry about this, but DO KNOW that the "savings clause" and "preemption" DOES NOT preempt insurance. Insurance and insurance companies ARE regulated by the state.