Group Health Insurance
Coverage underwritten on members of a natural group, such as employees of a particular business, union, association, or employer group. Each employee is entitled to benefits for hospital room and board, surgeon and physician fees, and miscellaneous medical expenses. There is a deductible and a coinsurance requirement each employee must pay. Characteristics of group health insurance include:
1. True Group Plan —one in which all employees must be accepted for coverage regardless of physical condition. (For example, coverage cannot be denied because of a pre-existing condition such as cancer.) Usually an employee must apply and pay the first premium within the first 30 days of employment or he or she forfeits the right to automatic coverage (a form of guaranteed insurability).
Individuals are covered under a master contract, each receiving a certificate denoting coverage.
2. Schedule of Benefits— describes what the insured and his or her covered dependent(s) is entitled to in the event of disease, illness, or injury. After the insured or the covered dependent has satisfied the deductible (defined as the first portion of all of the eligible expenses that occur during a calendar year of coverage), the insurance company pays a given percentage (usually 80%) until a total sum (stop loss), usually $5000, is reached for the calendar year.
After the total sum has been reached, the insurance company pays 100% of the total eligible expenses until the end of the calendar year subject to a maximum lifetime amount.
3. Eligible Expenses— include hospital bills, surgery, doctor’s services, private nursing, medicines, and X-rays. Payment allowed for these and other expenses are spelled out in the policy. For example, the hospital’s daily charge for room and board is subject to a specified maximum.
4. Exclusions from Provisions of Medical Benefits— many exclusions occur in group health plans, including benefits under Workers Compensation; certain mouth conditions; convalescent or rest cures; expenses incurred by a member of a health maintenance organization (hmo) or other prepaid medical plan; expenses associated with intentional self-inflicted injuries or attempt at suicide.
5. Coordination of Benefits —when there are two or more group health insurance plans covering the insured, one plan becomes the Primary Plan and the other plan(s) becomes the Secondary Plan(s). The Primary Plan is required to pay benefits due the insured and/or covered dependents before any other plan pays benefits. When a claim is made, the primary plan must pay the claim without regard to the benefits provided under any other plan. The secondary plan pays the difference between the total claim amount and the amount that the primary plan has paid, up to total allowable expenses.
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