Texas Large Group Health Insurance

Texas Large Group Health Insurance?

A large group (defined as 51 or more employees in Texas) health insurance policy is medically underwritten at the time of purchase, with rates based on employee participation and prior claims experience. Employees are not generally asked to fill out a medical questionnaire prior to obtaining coverage.

The health insurance company bases annual premium changes for large employer groups primarily on the claims experience of the group in past years, as well as any overall increases in the cost of providing health insurance coverage. An example of such costs would be changes in laws that may impact operating expenses.

Federal law mandates all large group contracts be renewed every year at the employer's discretion, unless there is non-payment of premium, the employer has committed fraud or intentional misrepresentation, or the employer has not complied with the terms of the health insurance contract.

The law also requires health insurance providers to give employees credit against any exclusionary period for pre-existing conditions if they have had prior health insurance coverage within 63 days of obtaining the group coverage from the large employer.

Many employer-based health insurance plans are fully insured by a health insurance company. This means the employer contracts with a health insurance company to provide its employees benefits, pays premiums for such coverage, and the insurance company assumes all claims risk.

All states regulate fully insured group plans. However, larger group health plans (usually for groups of 500 or more) may choose to either fully or partially self-insure their group benefit plans. This means that instead of paying health insurance premiums to a company, the employer sets a pool of funds in reserve and assumes its own risk for health benefit claims.

Companies that self-insure generally buy what is known as a stop-loss insurance policy to protect themselves against losses above a certain threshold and contract with either a third-party administrator or a health plan to administer benefits and handle claims. Many employees of companies that self-fund coverage do not even realize that their plan is self-funded by their employer.

Self-funded plans are regulated federally by the Department of Labor under the Employee Retirement Income Security Act of 1974 (ERISA), so they are sometimes known as ERISA plans. If employees are uncertain whether they are covered by a fully insured (and state-regulated) plan or a self-funded (and federally regulated) plan, they should ask their employer.

What if I no longer have group health insurance due to my job loss?

COBRA Continuation Coverage

If you purchase insurance coverage through your employer and your employer has 20 or more employees, you are entitled to continuation coverage by the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). Your state may require continuation coverage to be offered by smaller employers typically those with less than 20 employees. Under COBRA, if you leave your current job you have the option to continue your health care coverage for up to 18 months. You are required to pay the full premium yourself, even if your employer paid part of your premium while you were employed, and the employer may charge an additional, limited administrative fee.

To be eligible for COBRA coverage you must meet the following requirements:

• You must have had 18 months of continuous creditable coverage; with at least the last day having been under a group health policy (coverage is considered continuous if it is not interrupted by a break of 63 or more consecutive days).
• You must not be eligible for Medicare, Medicaid or a group health policy or have other major medical health insurance.
• You must apply for health insurance for which you are deemed an eligible individual within 63 days of losing your prior coverage.

COBRA Continuation Coverage Assistance Under American Recovery and Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on May 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by May 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through May 31, 2010 is also a qualifying event for purposes of ARRA.) The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

For more information on COBRA, please go to the federal Department of Labor Employee Benefits Security Administration website at: www.dol.gov/ebsa