In the US, the vast majority of people under the age of 65 who have health insurance obtain coverage through employer-sponsored group health plans -- either from their own job or through that of a family member. There are several reasons why group health plan coverage is so prevalent and popular:
- Covered benefits under employer-sponsored group health plans tend to be comprehensive, including prescription drug benefits and relatively low cost sharing;
- Coverage is subsidized because employers tend to pay most of the premium and because employer-sponsored health benefits enjoy federal income tax subsidies;
- Employer-sponsored group health plan coverage is subject to far greater consumer protections under federal and state law.
Does my employer have to offer my family and me health insurance coverage?
Group health benefits are voluntarily provided. There is no federal law requiring employers to offer health insurance coverage to employees and their dependents, or to contribute a minimum amount toward the employee's or dependents' premium. However, it is possible that some other requirement, for example, a collective bargaining agreement between your union and your employer, obligates the employer to offer health benefits.
How are my rights protected under my employer-sponsored health insurance coverage?
A federal law known as ERISA sets rules for private employer-sponsored benefit plans, including health insurance plans. ERISA protections for people in employer-sponsored health plans include:
- Accountability - Someone called a "fiduciary" must be named to administer the heath plan in a financially responsible manner and in the best interests of its enrollees.
- Information - You must be given written information (called a "summary plan description") describing what the employer-sponsored plan covers and what rules you must follow under the plan (e.g. paying co-pays or obtaining referrals before seeing a specialist.)
- Claims procedures and appeals - There also must be written rules for how you file a claim and how you can appeal a denial of covered services. ERISA also requires these claims appeals processes to be fair and timely.
- Other consumer protections - Employer-sponsored health plans cannot discriminate against you if you're sick by refusing to let you in the plan or by charging you more for coverage. In addition, group plans must offer you a special 30-day chance to enroll if you have a change in family status (e.g. if you marry or have a baby) or if you lose other coverage (e.g. that your spouse may have had through his or her job.) Finally, group plans must limit the imposition of pre-existing condition exclusion periods to no more than 12 months and they credit prior coverage you've had toward a new pre-existing condition exclusion period.
- COBRA - Group plans sponsored by employers with 20 or more workers must offer you the chance to temporarily continue coverage after you are laid off, quit, retire, or lose dependent status under the plan.
The provisions of ERISA are administered by the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL). If you have concerns about any of the protections listed above, you should contact the regional office in your area.
The difference between a "self-insured health plan" and a "fully-insured health plan"
Many employers that sponsor group health plans decide to buy a group health insurance policy from an insurance company or HMO. Such plans are referred to as "fully insured" group health plans. Typically, health plans sponsored by small employers are fully insured. Other employers that sponsor group health plans decide to "self-insure." That is, the employer pays claims under the group health plans out of the employer's own funds. Typically very large employers sponsor self-insured group health plans.
Your protection under these types of health plans
Federal law protections for consumers in employer sponsored group health plans apply whether the group health plan is fully insured or self-insured. Additional state protections apply only to fully insured group health plans. The American Diabetes Association has worked to pass health insurance provisions in 46 states that require fully insured health plans -- those regulated by state governments -- to provide coverage for diabetes medications, supplies, and services. These laws do not apply to policies that self-insure, as they are regulated through ERISA and the federal government.
Check with your employer to find out whether group coverage is available in your workplace. If health insurance coverage is available and you choose to elect it, you should receive a benefit plan summary explaining what will be included in your health plan. Be sure to find out what diabetes supplies and services are included in your health plan.
This information was drawn from "Health Insurance Resource Manual" prepared for the American Diabetes Association by Georgetown University's Health Policy Institute, ©2003, Georgetown University. All rights reserved.
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