Ethics Question

[dgoldenz]

I don't do much small group health, so maybe someone here has more experience with this type of thing. Let's say I have two 60-year-old people who own a business and are currently paying $2k/month for crappy individual health insurance. Base rate before underwriting for a much better group plan would total $1100/month for the two of them. Company does not release max rating levels, so would have to go through underwriting. Let's say this company was rated to 3x the normal rate, for a total of $3300/month for the two of them.

They don't want to pay $3300/month. However, if they have a group plan and drop it, they would become HIPAA eligible. Is it ethically wrong for the group to accept the plan for one month, knowing it will drop it just to get HIPAA eligibility and buy an individual plan for $2k/month that is significantly better than what they have now?

 

[somarco]

Never heard of a carrier that won't tell you the max rate up. Would be very surprised if it was anywhere close to 3x. The limit is set by the DOI and they will usually tell you or at least give you a range.

Don't know what the HIPAA eligibility requirements are for VA, but some states require you to keep the group coverage for X number of months before you can apply. Also, if conversion is available that may negate other HIPAA options.

 

[stuy119]

Here in IL the max rate up for a small group like that is 67%.

Find a GA and ask them, as they'll have plenty of experience with something along these lines.

 

[dgoldenz]

I asked my GA, carrier is Anthem, they said Anthem does not release the max rate-up. They did say that UHC can rate up to 1000% of the premium and they actually came across a case like that with someone who had AIDS in a 2-person group. If they could get the coverage with less than double the base rate they would be thrilled. Not sure how the renewal would look on the other hand.

As far as I know, there is no requirement to have the group for X number of months to get HIPAA, but I guess I will have to check on that. Pretty sure there is no conversion option in VA. Thanks for pointing it out.

 

[somarco]

I have never heard of a 10x max rate up. Can't believe the DOI would allow that. If true, carriers gotta luv VA.

Conversion is a carrier option. Nothing to do with the state unless, for some reason, the VA DOI requires that of carriers.

Call someone at Benefitmall. They should be able to help as well as the DOI.

 

[dgoldenz]

Can small groups be declined in other states? I was told that in VA, they can't be....maybe that's the reason for the huge max rate-up. If the rate-up max was only 67% and you had a group with two people who both had cancer, that doesn't seem like a winning bet for the insurance company.

 

[somarco]

Can't speak for other states with authority, but as far as I know carriers cannot refuse to quote a group or issue coverage if they meet the other criteria of a legitimate group. Max rate up for most plans here is 67% but can be as high as 72% in some cases. Most of my 2 person groups are max rated and everyone is a money loser for the carrier.

 

[djs]

I will say, I like small group in California. Max rate up is 10%. You're $1100 plan would be issued at $1210. GI as well.

Hardest problem for many here is proving they are a group of 2. Many are, but they don't have the paperwork in place to prove it. Never wrote a paycheck, business license is only in 1 name, etc.

I also have no idea what VA does. I guess it's good I'm not licensed there.

Dan

 

[Josh]

Can small groups be declined in other states? I was told that in VA, they can't be....maybe that's the reason for the huge max rate-up. If the rate-up max was only 67% and you had a group with two people who both had cancer, that doesn't seem like a winning bet for the insurance company.

In VA they can't be declined (as is I believe the case in every state), but in VA I don't think there is a limit on the rate-up. It could in theory be 10,000%.

 

[dgoldenz]

Can't speak for other states with authority, but as far as I know carriers cannot refuse to quote a group or issue coverage if they meet the other criteria of a legitimate group. Max rate up for most plans here is 67% but can be as high as 72% in some cases. Most of my 2 person groups are max rated and everyone is a money loser for the carrier.

This one sure would be if it was in that range. Her Rx alone is about $3500/month in total.

The husband actually sounds like he did a very good job setting up the business. They are equal partners and have wage and tax report, all proper filings and paperwork done, etc. If they ended up anywhere under $2500/month for this plan would be a winner.