11.5.4 Coverages
There are certain considerations that are universal when writing policies for any of the types of insurance we discuss in this course. Below is a brief version of what group underwriters scrutinize.
- Why does the group exist in the first place?
- How stable is the group (financially and employee turnover)?
- Does the group tend to change insurers often?
- How are benefits determined?
- How is eligibility determined?
- Are premium payments contributory or noncontributory?
- What is the group's prior claims experience?
- What is the composition of the group?
- What is the size of the group?
- What industry is the group associated with?
Group Basic Medical Expense
Basic medical insurance - hospital, surgical and physicians' expenses - is available for groups as well. We've already gone into each of these subjects; however, benefits have expanded recently for most insurers. This includes not only dental and vision, but also prescription drugs, home health care, extended care facilities, diagnostic x-rays, and laboratory services. These services can be combined and included under one policy if desired.
Dental and Vision Care
As health care costs rise, it seems dental and vision health care coverage is increasing in popularity. Deductibles, copayments, and annual benefit limits are standard in both. Some plans will pay 100% of specific services such as routine teeth cleaning and eye examinations, but most services require a copayment.
What is meant by "copayment?"
Copayment is the specified dollar amount that the insured must pay for certain covered health care services.
Group Major Medical
Group major medical plans differ from individual major medical plans with respect to the benefits. Groups can provide a much broader base of coverage and provide a lower deductible. Deductibles under the group plan usually run from $250 to $500; whereas it's not unusual for individual plans to contain deductibles that run $1,000 or more.
Three other provisions that differ as well from individual plans are: (1) Coordination of benefits, (2) Subrogation, and (3) maternity benefits.
The Coordination of Benefits (COB) provision comes into play when an individual is covered by more than one group plan. Perhaps the husband has a policy through his company that also covers his wife. His wife has a policy through her company as well. The benefits of these plans must be coordinated to eliminate duplicate payments. The coordination establishes the primary and secondary payor.
The coordination of benefits provision limits benefits from multiple group health insurance policies in a particular case to 100% of the expenses covered and designates the order in which the multiple carriers are to pay benefits.
The Civil Rights Act of 1979 made it mandatory that group insurance provide maternity benefits if an insured group consists of 15 or more participants. Maternity benefits are usually considered as a specific category due to predictability and its large expense. Benefit plans are usually available as individual policies and are many times available only as an added benefit for an additional premium.
In most insurance policies, an insurer is given subrogation rights. This means that "the insured transfers the right of recovery against others to the insurer. In most cases, the insurer will pay any legitimate claim filed by the insured. However, if the insurer believes other individuals or insurers are legally liable to share or even assume the full responsibility for the loss, the insurer will sue or otherwise seek to recover the costs of the claim using these subrogation rights."
Most family basic policies cover maternity claims. Usually, the hospital maternity expenses are covered up to a maximum of ten times the room and board benefit; however, some contracts may provide a flat indemnity.
Florida law requires group medical expense plans to provide maternity benefits.
In a family basic policy, when do maternity benefits go into effect?
Florida law provides that no preexisting condition exclusion may apply to pregnancy for groups of two or more. Consequently, maternity benefits go into effect when a family basic policy is issued.
