Commonly Asked Questions

General

1Is there a law that requires employers to offer group health benefits?
There is no federal or state law requiring employers to offer health care benefits to employees. However, it’s common for employers to provide health benefits in order to attract and retain employees. Employers that offer health insurance must adhere to regulations, such as the requirement to offer continuation coverage like COBRA for companies with more than 20 employees. HIPAA (Health Insurance and Portability Act) also mandates rights to group health insurance for employees who have pre-existing medical conditions.
2How do insurance companies determine the cost of group health insurance?
Insurance companies use two methods to calculate group insurance premiums: underwriting and community rating. The method used depends on the state your company is located in. Medical underwriting which is used in such states as CT means each employee is considered individually, so that the overall health of everyone in your group determines the overall cost. Rates may go up if you have one employee with a history of chronic illness (such as diabetes) or with a major illness. Rates are also age banded. The group cannot be turned down because of the health of one individual, nor can any single employee be denied coverage when the rest of the group has been accepted under HIPAA. This law also prevents insurers from charging different rates to individuals in the same group based on their health. Rates within the group may be based on age or gender. Community rating is used in states such as New York where age and health are not considered in setting group premiums for groups of less than 50 lives. Everybody in each geographic area pays the same premium for group health plans. Community rating is a good deal for older people and not for younger healthier people Community rating in most cases is based on the employer’s county to determine the group’s premium. When employees live out of the area, companies look at the employee’s ZIP code to determine cost for the overall group.
3What percentage of the health insurance premium do employers pay?
According to a Kaiser Family Foundation survey, "Employer Health Benefits 2000," small employers (3 to 199 employees) typically pay 85 percent of premiums for single-employee coverage, and two thirds for family coverage. Midsize firms (200 to 999 employees) pay closer to 90 percent of single-employee premiums and 80 percent of family premiums, and large firms (1,000 to 4,999 workers) pay close to 90 percent of single employee premiums and 75-80 percent of family premiums.
4How can self employed people find a good health plan?
Self employed people have options for finding coverage. Some states such as NY and CT allow the self-employed to purchase health insurance at group rates, as a "group of one." One-person group premiums are significantly lower than premiums on individual health insurance policies. Oxford, for example offers groups of one in New York City and the Boroughs. So does GHI. CT also offers sole proprietor group rates. Many states define a "group" as two or more employees, leaving the self-employed one other option: You may be eligible for an "association" health plan if you belong to the Chamber of Commerce or a trade association. Be careful with association plans, because it may not be regulated by the state you live in. So if you had a problem or dispute with the health plan, your state’s department of insurance would be less effective in helping you.
5Can an employer decide which diseases, treatments, and conditions to cover within a group health plan?
State’s laws control certain diseases and conditions must be covered by your group insurance plan. Coverage for other diseases and conditions is optional, and whether you choose to purchase it will depend on how much you’re willing to spend and what coverage your employees require. Newhouse can help you tailor a plan that meets your needs and budget. What is a typical waiting period before newly hired employees become eligible to join an employer’s group health benefits plan? The average wait for health coverage at small firms (between 3 and 199 workers) is 2 months and an average of 1.5 months across firms of all sizes, according to a survey by the Kaiser Family Foundation, "Employee Health Benefits 2000,"
6Do we have to qualify before I can purchase health insurance for my small business?
You only have to show are a small business with 2-50 employees, but neither you nor your employees will have to provide any medical evidence of insurability.
7Do all of my employees have to be covered?
It depends! You may determine if a class or subgroup of your employees or if all of them are eligible for health insurance coverage through your business. For example, some employers decide that only employees working more than 20 hours per week are eligible for health insurance coverage. Most plans allow you to set the eligibility criteria. You’ll need to ask about that when you are looking at specific plans. Also, if you pay the entire premium, all of your eligible employees must be included, but if employees have to contribute, employees can choose to waive out. When a plan is contributory, Point of Service Plans (POS) and Preferred Provider Plans (PPO’s) usually require at least 50% of eligible employees must participate and many (but not all) plans require a certain percentage of employees to enroll for a business to qualify (normally 70 or 75%). One important exception is that HMOs may not establish any minimum participation requirements within a small group and accept any person within a small group who elects HMO coverage.
8Should new hires have to wait before coverage begins?
We recommend you have some period of time before newly-hired employees are eligible for enrollment. A waiting period is normally between one month and six months, often depending on your type of business.
9Do plans include coverage for domestic partners?
You can include domestic partner coverage under you plan. Not all insurers, however, offer domestic partner coverage for businesses with 2-50 employees. We can help you determine what carrier will best meet your specific needs.

COBRA

1Can a health insurance policy be cancelled if we submit a lot of claims?
No. Your coverage cannot be canceled because you have a lot of claims. This is called "guaranteed renewability". You have this protection provided that you pay the premiums.
2What if I’ve been recently laid off from a job from a small business in NY?
New York State law provides a continuation right for health plans that are not subject to COBRA. Insurance Law Sections 3221(m) and 4305(e), which set forth the right to continuation, apply to groups of twenty or fewer employees and to cases where an employee is not eligible for COBRA. The rights afforded by these statutes apply only to group policies providing hospital, surgical or medical expense insurance and arise when all or any portion of the insurance on an employee ceases because of termination of employment or membership in the class or classes eligible for coverage under the policy. Employees are entitled to a right of continuation provided that they are not eligible for identical coverage with another plan. The employee must also continuation coverage and pay the applicable premiums within the time frames set forth by the regulations.
3What is COBRA continuation health coverage?
Consolidated Omnibus Budget Reconciliation Act (COBRA) provides continuation of group health coverage for former employees, retirees, spouses, former spouses, and dependent children when coverage is lost due to certain events. Group health coverage for COBRA participants is often more expensive than health coverage for active employees, because the employer often contributed towards part of the premium for active employees, while COBRA participants generally pay the entire premium themselves. It is ordinarily still less expensive, than individual health coverage.
4Who is entitled to benefits under COBRA?
Generally speaking, Employees, spouses and dependent children are entitled to Cobra benefits as a qualified beneficiary.
5How does a person become eligible for COBRA continuation coverage?
be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event. For employees, voluntary or involuntary termination of employment for reasons other than gross misconduct, or change in full time employee status qualifies for COBRA. For spouses, divorce or death would qualify and for children, examples include loss of dependent child status, divorce or death of a parent would qualify.
6What types of group health plans are subject to COBRA?
The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments. Some states like New York also require coverage be offered for smaller employers under state continuation laws.
7What process must individuals follow to elect COBRA coverage?
Employers must notify plan administrators of a qualifying event within 30 days after an employee’s death, termination, reduced hours of employment or entitlement to Medicare. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child’s ceasing to be covered as a dependent under plan rules. Plan participants and beneficiaries generally must be sent an election notice within 14 days after the plan administrator receives notice that a qualifying event occurred. The individual then has 60 days to elect COBRA continuation coverage and 45 days after electing coverage to pay the premium.
8How long after a qualifying event do beneficiaries have to elect COBRA coverage?
Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Each qualified beneficiary may independently elect COBRA coverage. A covered employee or the covered employee’s spouse may elect COBRA coverage on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.
9Can individuals qualify for longer periods of COBRA continuation coverage?
In the event of a disability, COBRA can extend the 18 month period of continuation coverage for a qualifying event. To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must get a ruling from the Social Security Administration that he or she became disabled within the first 60 days of COBRA continuation coverage and meet other guidelines. If these requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage.
10If I waive COBRA coverage during the election period, can I still get coverage at a later date?
If a qualified beneficiary waives COBRA coverage during the election period, he or she may revoke the waiver of coverage before the end of the election period and elect COBRA coverage.
11Under COBRA, what benefits must be covered?
Qualified beneficiaries must be offered coverage identical to the existing group health plan. A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. When does COBRA coverage begin?

For additional answers to your questions Health Reform FAQ