Q: Do group health insurance plans have an advantage over individual health insurance plans?
A: The short answer is yes. Group health insurance plans work off of the idea that risk is spread over a larger group. Therefore, premiums are much less than if you bought an individual plan because if you get sick, there is not a healthy person that is paying premiums that can counterbalance you. Because risk is spread to a larger group of people, generally more services are offered or are more affordable in group health insurance plans than they would be in individual plans.
Q: What is COBRA?
A: COBRA is a program that allows the temporary continuation of health insurance at group rates for former employees, spouses, dependent children, retirees, and former spouses if coverage is lost because of a qualifying event (this includes employment termination and retirement; a full list of qualifying events can be found at COBRA’s Web site). Under COBRA, you continue with your current group health insurance plan, but you pay both your portion of the premium and your former employer’s portion of the premium. COBRA payments are more expensive than the group insurance premiums because you are now paying the full premium, but the full benefits of the group health insurance plan are still in place while COBRA is in effect.
Q: What is the difference between primary and secondary coverage?
A: Primary and secondary coverage occurs when two individuals in a family are covered under an employer’s group health insurance plan. The insurance industry does not want to have a family profit from dual coverage by having two companies pay for a procedure. Therefore, insurance companies establish primary coverage (either the plan offered by the individual’s employer or the plan that the individual has been with the longest), which covers a procedure up to the limit specified by the plan, and secondary coverage (coverage from being a dependent under another plan), which reimburses the individual after the individual has reached the maximum limit of the primary coverage.
Q: Can I join a group policy with a preexisting condition?
A: A preexisting condition is defined as a medical condition that is either physical or mental that exists prior to signing or applying for any insurance policy. In most cases, preexisting conditions are not covered by a new insurance policy and can be grounds for an insurance company to deny an applicant insurance. However, there are exceptions to the preexisting condition rule: pregnancy is often referred to as a preexisting condition, but health insurance companies are required to treat women who have been pregnant as individuals without any preexisting condition.
Q: My employer is going out of business. Can I continue on with my group policy?
A: Unfortunately, when an employer goes out of business, the group policy ceases to exist, and all previous employees are required to find new forms of insurance. Most insurance companies will work with employees to switch over to an individual policy that matches the group policy. However, individual policies are generally more expensive than group policies. An individual would have to find another job offering insurance in order to have the benefits of being under a group health insurance plan.