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Insurance
Group and Individual Policies
By the Virginia Bureau of Insurance
Health insurance policies and managed care health insurance plans may be obtained in the form of group insurance or individual insurance. The difference between group insurance and individual insurance is in the way coverage is purchased.
Group insurance may be obtained through an employer, a trust, a union, an association, a multiple employer welfare arrangement (MEWA), or other organization, and covers several people or groups under one policy or group agreement.
Individual insurance covers one person or all members of one family under one policy or evidence of coverage.
Group plans
Group health insurance is exactly what its name suggests - one insurance policy or plan covering a group of people. Fulfilling your insurance needs may prove relatively simple if your employer offers a group plan or a choice of plans. Group plans cover several people or groups under one policy. The group policyholder may be an association, business, or union with which you are affiliated, or it may be your employer.
Many group plans include provisions to include family members. When you enroll in a group plan, the group (your employer, association, etc.) is the policyholder, and, as an employee or group member, you receive a certificate or an evidence of coverage (EOC). Insurers must offer Small Employers, (employers of two to fifty employees), guaranteed-issue group plans known as Small Employer Group Coverage. This coverage is available to small business employers regardless of the health claims experience of the employee group or the health status of an individual employee. Insurance companies and Managed Care Health Insurance Plans that offer coverage to Small Employers in Virginia must also make available the Essential and the Standard Health Benefit plans.
Many trade and professional associations offer their members insurance. Self-employed men and women often find association membership an attractive route to health insurance. Note: Often, an insurer issues a group policy to a policyholder (i.e. a trust, association or group) located outside of the Commonwealth of Virginia. This means that Virginia's laws governing benefits may not
apply to the out-of-state group policy, even though the insurance is sold to Virginians. If the group policy under which you are covered is issued outside of Virginia, and you have an inquiry or complaint about your coverage, you must direct that inquiry or complaint to the insurance department of the state in which the group policy was issued.
What is Covered Under a Group Plan?
A group plan will only cover the expenses outlined in the policy, certificate, or EOC. A number of factors are considered in determining if a service is covered, and the extent of the available coverage. The following factors should be considered before you submit a claim:
- Is the service covered under the terms of the policy? The certificate or EOC will describe the covered services and will list exclusions and limitations.
- Is the service medically necessary? Routine services or elective procedures that are not medically necessary will generally not be covered.
- What does the company consider to be an "allowable charge" or a "usual, customary and reasonable (UCR) charge" for the service? Many policies and plans establish allowable charges for services and procedures. The charges may be representative of fees charged by similarly situated providers rendering the same services in a given locality, region, or area, (often referred to as "usual, customary and reasonable"), or they may be based on other criteria established by the company. If your plan bases payments on a UCR schedule, or a schedule of allowable charges, you may be responsible for any difference between the UCR or allowable charge and the provider's actual charge. However, in some cases, providers agree to accept the UCR or
allowable charge, which means the patient will not be responsible for the difference.
- Is the condition considered a pre-existing condition? A group health plan may deny benefits for a pre-existing condition, but there are laws in Virginia that specifically define a "pre-existing condition" and limit how long benefits may be withheld because of a pre-existing condition. Also, certain conditions may not be considered pre-existing.
- Did the patient follow any pre-certification or pre-admission requirements prior to obtaining services? Many insurers require pre-admission or pre-certification authorization prior to being admitted for non-emergency services, or receiving certain care. You may be held financially
responsible for the cost of the care if you fail to obtain the pre-certification or pre-admission authorization.
Individual Plans
Individual plans cover one person or all members of a family under one policy or evidence of coverage. Individual health coverage is a good option if you are self-employed or lack access to group coverage.
For traditional health insurance individual plans, you may take at least 10 days from the date you receive the policy to decide whether to keep or cancel it. Some policies or plans provide a longer period of time. For a full refund, you must return the policy to the company within the allowed time.
You should carefully consider coverage and costs when purchasing an individual health insurance policy or managed care health insurance plan. Generally, when buying an individual policy or plan, you must provide evidence of insurability before the company will agree to insure you or your family. Standards for determining evidence of insurability vary from company to company. The process by which an insurer or managed care organization evaluates your eligibility for coverage is referred to as underwriting.
The Bureau of Insurance does not have the regulatory authority to change an insurer's underwriting decision. However, the Bureau of Insurance will review an insurer's files to ensure that established underwriting guidelines are being administered consistently and appropriately.
Fully insured plans issued in the Commonwealth of Virginia are regulated by the Bureau of Insurance and are subject to all applicable laws and regulations governing group health plans in Virginia. A "fully insured plan" is a plan the employer purchases directly from an insurance company, and the insurance company assumes the risk to pay all covered health claims.
Self-insured (or self-funded) plans are funded by the employer to pay the health claims of its employees. The employer actually pays the bills for its employees' health care and assumes all associated risks. Sometimes, the employer with a self-insured plan will hire an insurance company to handle administrative duties. In this case, the insurance company is not assuming any financial risk, but is acting as a third-party administrator, following the directives of the employer. Self-insured plans are subject to the Federal Employee Retirement Act of 1974 (ERISA). The U.S. Department of Labor is the federal government agency that is responsible for handling matters involving self-insured plans.
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