group for insurance agent

[Guest]

If a butcher, a baker & a candelstick maker all decided to form a group to get health insurance it most likely would not be allowed.

I disagree. If all three decide to get state ins. licenses or RE licenses and open an insurance agency or a RE agency, no court in the state would find for the carriers charge that it was fraud.

Same with a husband-wife team who decide to open a store to sell teddy bears.

It has nothing to do whether the business owners are from similar backgrounds (maybe like being all white or all black?) and/of if they had experience in the particular business. It's about the business... is it legal? Is operating in compliance with the law? Can it show that it is attempting to make sales? Is there investment? Is there cash flow? The rule here is simple. If it looks like a duck, walks like a duck, and quacks like a duck, there is no court in CA that will rule that it's not a duck

Al

 

[Crabcake Johnny]

The rule to pay attention to is a business cannot be formed just to get group health insurance. I assure you if a group of unhealthy people did indeed decide to pull it off just the first few claims would trigger a review and immediate rescision of coverage.

 

[somarco]

If all three decide to get state ins. licenses or RE licenses and open an insurance agency or a RE agency, no court in the state would find for the carriers charge that it was fraud.

Taking it out of context.

Read the rest of my post.

I apologize if my paragraphs made it difficult to follow the thought process.

 

[somarco]

The health of the individuals does not matter. Three healthy individuals who may form a group that lacks commonality of purpose from a business viewpoint would run into the same issues.

The group carrier is going to require certain documents to prove the business relationship. The list will vary from carrier to carrier, but will usually include a business license, state payroll records and possibly a tax return.

If supporting documentation can be supplied to prove a legal business relationship, it really doesn't matter if the individuals are healthy or not.

Most of my small groups are comprised mostly of people who cannot otherwise qualify for underwritten health insurance and the carriers know it.

 

[Dave020]

Most of my small groups are comprised mostly of people who cannot otherwise qualify for underwritten health insurance and the carriers know it.

Hit the nail right on the head. Pooled risk. Does not exist in the individual & family marketplace. Carriers use RAF (risk adjustment factor) to rate appropriate group premiums. In CA, 2-50 are guaranteed-issue max rate of 110% of standard premium. Groups under 5 always at 1.10 RAF.

 

[johnrocks]

Hit the nail right on the head. Pooled risk. Does not exist in the individual & family marketplace. Carriers use RAF (risk adjustment factor) to rate appropriate group premiums. In CA, 2-50 are guaranteed-issue max rate of 110% of standard premium. Groups under 5 always at 1.10 RAF.

So if a group has say 20 members with an average age of 45, it would be less risk and therefore less expensive if the average age was 57? Or if you had 17 of those members were in perfect health but 2 had diabetes and one had cancer that would be more of a risk and therefore more costly than if 19 was healthy and one had a broken leg three years ago?

 

[Dave020]

It is all determined by overall health of the group - and claims will come into the picture over time.

The health questionaire tells the carrier what issues are going on within the group, then over time the claims of the group will come into play. A group of 20 55-year olds with good health and low claims may be reduced down to a low RAF while a group of not-so-healthy 20-year olds with many claims may be pushed up RAF to maximum.

I have groups under 10 that get decreased RAF on every annual renewal for good health and low claims. Started out 110% now around .98.

It is going to be based on the risk the group represents regardless of the overall age of the group.

Dave
www.davefluker.com

 

[somarco]

It is going to be based on the risk the group represents regardless of the overall age of the group.

Not exactly.

Groups are first manual rated to reflect the age, gender, PPO network, zip & industry loads. Those rates are then adjusted up or down by underwriting to account for health risks.

 

[Crabcake Johnny]

Unless you're here in MD where group is non-underwritten.

 

[somarco]

I did not realize MD was a community rated state for small group.