When Good Groups Go Bad…

Okay, the group really didn’t go bad, but I liked the catchy headline. You may recall that I previously posted about a group that had particularly poor “participation” (“An interesting challenge”, posted 2/9/05). Because there were 13 employees, but only 5 elected coverage, it was difficult to find another carrier for the group.

In the event, the employer has decided to do away with the group altogether, and to have each employee apply for individual coverage. We found a carrier that would put all these policies onto one, convenient list bill, and the employer will take care of the appropriate payroll deductions.

Sounds simple, right?

Would that it were so. As you’ve no doubt already guessed, we’ve had a few setbacks. Specifically, two employees (as well as a spouse) have been declined due to health issues. I’m awaiting word on the other three.

Okay, so now what? How will the two employees who have been declined obtain coverage? Since there’s no COBRA issue here, then it falls to state laws. In Ohio, the test for continuing group coverage requires that the insured be eligible for unemployment compensation. Well, fortunately, neither of these two have actually lost their jobs. So what options are left?

Two, actually: First, by state law, group plans that are not subject to COBRA must offer a conversion plan to anyone leaving the group (or, in this case, the group leaving them). Such plans must have no exclusion for pre-existing conditions. Now, this does NOT mean that such conditions MUST be covered.

Hunh?!

Well, let’s take a back problem, for example. Jane has some back problems, and has been successfully treated by her local chiropractor. The group covers this (up to an annual limit), and the doc is in network. Hoorah! But now the group goes away, and we’re offered a conversion plan that has no chiropractic coverage. There’s nothing in the law that says the conversion plan must offer chiro, so Jane will be footing the bill herself henceforth.

I’ll cover the types of conversion plans, and the other option(s), tomorrow.