Group Insurance Essentials

A distinguishing feature of group insurance is that one policy covers multiple insureds. The contract (master policy) is between the insurer and the employer or other single authority, the policy owner. Each participant in the group plan is issued a certificate that serves as evidence of insurance. The certificate is a rather brief document that describes the group insurance benefits as well as the administrative procedures required to obtain benefits.

Group health insurance may be issued to employer groups or any other association group that is “natural.” This means that the group must exist for some reason other than to obtain group insurance. Examples of association groups include labor unions, trade associations, fraternities/sororities, and debtor groups.

The Affordable Care Act uses the language “bona fide association”, and you may see this term on the pre-licensing exam. With respect to health insurance coverage, the term “bona fide association” means an association which:

1. Has been actively in existence for at least 5 years; has been formed and maintained in good faith for purposes other than obtaining insurance
2. Does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee)
3. Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member)
4. Does not make health insurance coverage offered through the association available other than in connection with a member of the association
5. Meets such additional requirements as may be imposed under State law.

While the Affordable Care Act (aka Obamacare) was without question the most extensive overhaul of the healthcare system this country has seen in a generation, HealthCare.gov and the state exchanges are not testable. As such, we do not discuss the real “meat and potatoes” of Obamacare in this course.

The most important and far reaching consequence of Obamacare is the elimination of pre-existing conditions; everybody, regardless of current or past medical conditions, is eligible to purchase health insurance. For the purpose of the pre-licensing exam, however, you want to be familiar with group policies being issued outside of HealthCare.gov and/or the state exchanges.

When you see Affordable Care Act (45 CFR 144, 146, 147, 148, 150, 154, 155, 156, 157, 164…) in the exam content outline, this refers to the United States Code of Federal Regulation, Title 45. The parts identified refer to how the Public Health Service Act (PSHA) encompassed HIPAA and COBRA into Obamacare.

Lesson Summary

Group insurance is a policy that covers multiple insureds, with the main contract being between the insurer and a single authority like the employer. Each participant receives a certificate detailing the benefits and administrative procedures. The group may be employer-based or a natural association group like a union or fraternity.

Chapter Vocabulary