AMF Group Insurance cheat sheet

Group insurance covers a defined class of persons under a single master contract issued to the policyholder (employer, association, or trustee), with certificates issued to individuals as evidence of coverage.

Eligibility rules define the eligible class by employment status, hours worked, and waiting period; the active-at-work provision requires an employee to be on the job on the effective date or coverage is delayed.

Underwriting of a group relies on group characteristics rather than individual evidence: group size, industry, age and sex composition, income level, and past claims experience drive rates.

Experience rating sets premiums from the group's own claims and expense history with credibility adjustments; manual (pooled) rating applies community rates when the group is too small for credible experience.

A grace period (commonly 31 days for group life and health) keeps coverage in force after a premium due date; coverage continues during the grace period and the premium is still owed.

The master contract contains a entire-contract clause, a incontestability provision (typically two years for fraudulent misstatement), and a certificate-of-coverage clause requiring certificates be furnished to insureds.

Conversion privilege allows an insured whose group coverage terminates to convert to an individual policy without evidence of insurability, generally within 31 days, at attained-age rates.

Continuation (portability) provisions may permit continued group coverage for a limited period after termination; COBRA-style continuation is a statutory right distinct from the contractual conversion right.

Misstatement of age or sex is adjusted by the insurer: benefits or premiums are recalculated to what the correct age or sex would have produced, rather than voiding the coverage.

Group term life provides a stated death benefit for a term period with no cash value; the schedule of benefits is usually a multiple of salary (for example 1x, 2x, or 3x annual earnings) or a flat amount by class.

Benefit schedules may be reduced at older ages (commonly 65% at 65, 50% at 70, or similar reductions) and often include a maximum benefit cap per insured.

Group accidental death and dismemberment pays an additional principal sum for accidental death and a percentage of the principal sum for specified losses such as loss of a limb or sight.

Dependent group life covers a spouse and dependent children, usually in flat amounts smaller than the employee's coverage, and typically terminates when the employee's coverage ends.

Group universal life and group variable universal life combine group term with a cash-value accumulation account; they are permanent products distinct from pure group term.

Imputed income: employer-paid group term life coverage above $50,000 of death benefit creates taxable income to the employee, calculated using IRS Table I rates.

Conversion and portability rights on termination of group term life are typically 31 days; evidence of insurability is not required for conversion within that window.

Optional coverage is commonly contributory; a participation requirement (for example 75% of eligible employees or 100% of those eligible for dependent coverage) must be met for contributory plans.

Survivor income benefit or survivor protection options may continue a monthly income to a beneficiary after the employee's death, funded by the death benefit.

Short-term disability (STD) typically replaces 50-70% of pre-disability earnings for 13 to 26 weeks after an elimination period of 0 to 14 days; long-term disability (LTD) begins after STD and commonly lasts to age 65.

LTD benefit formulas commonly replace 60% of base monthly earnings, with a maximum monthly benefit and an offset for Social Security, workers' compensation, and other income so total replacement stays below 100%.

The definition of disability is the central term: 'own occupation' applies for an initial period (often 24 months) and then shifts to 'any occupation' for which the insured is reasonably fitted by education, training, or experience.

The elimination period is a time deductible measured from the onset of disability during which no benefit is paid; longer elimination periods reduce premium.

Residual or partial disability benefits pay a proportional benefit when the insured returns to work at reduced earnings; a recurrent disability clause waives a new elimination period if disability recurs within a stated period (often 6 months).

Group health plan cost-sharing terms: deductible, coinsurance (for example 80/20), copayment, out-of-pocket maximum, and annual or lifetime benefit limits where permitted by law.

Managed care designs include HMO (closed panel, primary care gatekeeper), PPO (network discounts with out-of-network benefits), POS (hybrid), and high-deductible health plans paired with health savings accounts.

Coordination of benefits determines order of payment when a person is covered by two group plans: the plan covering the person as an employee usually pays before the plan covering the person as a dependent.

Pre-existing condition limitations, waiting periods, and actively-at-work requirements affect when newly enrolled employees and dependents become eligible for benefits.

Plan design balances cost, competitiveness, and adequacy: richer benefits raise premium, so employers trade deductibles, coinsurance, and benefit maximums against cost.

Contributory plans require employee premium sharing; noncontributory plans are employer-paid in full, and participation requirements apply only to contributory plans.

Eligibility design choices include waiting periods (for example 30, 60, or 90 days), minimum hours (often 30 per week), and classes of employees defined by salary, location, or job category.

Flexible benefits (cafeteria) plans allow employees to choose among benefits with pre-tax dollars under a Section 125 plan; a premium conversion feature lets employees pay their share pre-tax.

Funding arrangements include fully insured, self-funded (employer retains risk, often with stop-loss insurance), and minimum premium or administrative-services-only arrangements.

Defined contribution health approaches give employees a fixed dollar amount toward coverage; defined benefit approaches promise a specified benefit package.

Wellness and disease management programs are plan design features intended to reduce claims cost and improve productivity; incentives must comply with applicable nondiscrimination and privacy rules.

Integration with statutory benefits: disability plans offset Social Security and workers' compensation, and retirement plans coordinate with Social Security through integration levels.

Plan documents (summary plan description, certificate of coverage) must accurately describe eligibility, benefits, exclusions, and claims procedures; design changes require timely disclosure.

ERISA governs employer-sponsored group benefit plans: it imposes fiduciary duties, reporting and disclosure (Form 5500, summary plan description), and claims procedure requirements.

COBRA continuation applies to employers with 20 or more employees; qualified beneficiaries may continue group health coverage for up to 18 months (29 months for disability extension), with the beneficiary paying up to 102% of premium.

HIPAA includes portability (creditable coverage, special enrollment), nondiscrimination on health status, and privacy and security of protected health information.

The Affordable Care Act prohibits lifetime and annual dollar limits on essential health benefits, bars pre-existing condition exclusions, and requires coverage of dependents to age 26.

State regulation covers insurer licensing, policy forms and rates, producer licensing, and mandated benefits; state insurance departments enforce market conduct and unfair trade practice rules.

Fiduciary duty requires the plan fiduciary to act solely in the interest of participants, follow plan documents, and prudently manage plan assets; prohibited transactions are barred.

Suitability and disclosure: a producer must recommend coverage appropriate to the client's needs, disclose compensation and conflicts, and avoid misrepresentation, twisting, and rebating.

Client relations best practice includes documenting needs analysis, delivering the certificate and summary plan description, and explaining eligibility, exclusions, and claims procedures in plain language.

Privacy and consent: obtaining authorization before disclosing an individual's health information, safeguarding records, and limiting collection to what is necessary for underwriting or administration.

Eligibility rules define the eligible class by employment status, hours worked, and waiting period; the active-at-work provision requires an employee to be on the job on the effective date or coverage is delayed.

Underwriting of a group relies on group characteristics rather than individual evidence: group size, industry, age and sex composition, income level, and past claims experience drive rates.

Experience rating sets premiums from the group's own claims and expense history with credibility adjustments; manual (pooled) rating applies community rates when the group is too small for credible experience.

A grace period (commonly 31 days for group life and health) keeps coverage in force after a premium due date; coverage continues during the grace period and the premium is still owed.

The master contract contains an entire-contract clause, an incontestability provision (typically two years for fraudulent misstatement), and a certificate-of-coverage clause requiring certificates be furnished to insureds.

Conversion privilege allows an insured whose group coverage terminates to convert to an individual policy without evidence of insurability, generally within 31 days, at attained-age rates.

Continuation (portability) provisions may permit continued group coverage for a limited period after termination; statutory continuation is a separate right from the contractual conversion right.

Misstatement of age or sex is adjusted by the insurer: benefits or premiums are recalculated to what the correct age or sex would have produced, rather than voiding the coverage.

Group insurance covers a defined class of persons under a single master contract issued to the policyholder (employer, association, or trustee), with certificates issued to individuals as evidence of coverage.

Group term life provides a stated death benefit for a term period with no cash value; the schedule of benefits is usually a multiple of salary (for example 1x, 2x, or 3x annual earnings) or a flat amount by class.

Benefit schedules may be reduced at older ages (commonly 65% at 65, 50% at 70, or similar reductions) and often include a maximum benefit cap per insured.

Group accidental death and dismemberment pays an additional principal sum for accidental death and a percentage of the principal sum for specified losses such as loss of a limb or sight.

Dependent group life covers a spouse and dependent children, usually in flat amounts smaller than the employee's coverage, and typically terminates when the employee's coverage ends.

Group universal life and group variable universal life combine group term with a cash-value accumulation account; they are permanent products distinct from pure group term.

Imputed income: employer-paid group term life coverage above $50,000 of death benefit creates taxable income to the employee, calculated using IRS Table I rates.

Conversion and portability rights on termination of group term life are typically 31 days; evidence of insurability is not required for conversion within that window.

Optional coverage is commonly contributory; a participation requirement (for example 75% of eligible employees or 100% of those eligible for dependent coverage) must be met for contributory plans.

Survivor income benefit or survivor protection options may continue a monthly income to a beneficiary after the employee's death, funded by the death benefit.

Short-term disability (STD) typically replaces 50-70% of pre-disability earnings for 13 to 26 weeks after an elimination period of 0 to 14 days; long-term disability (LTD) begins after STD and commonly lasts to age 65.

LTD benefit formulas commonly replace 60% of base monthly earnings, with a maximum monthly benefit and an offset for Social Security, workers' compensation, and other income so total replacement stays below 100%.

The definition of disability is the central term: 'own occupation' applies for an initial period (often 24 months) and then shifts to 'any occupation' for which the insured is reasonably fitted by education, training, or experience.

The elimination period is a time deductible measured from the onset of disability during which no benefit is paid; longer elimination periods reduce premium.

Residual or partial disability benefits pay a proportional benefit when the insured returns to work at reduced earnings; a recurrent disability clause waives a new elimination period if disability recurs within a stated period (often 6 months).

Group health plan cost-sharing terms: deductible, coinsurance (for example 80/20), copayment, out-of-pocket maximum, and annual or lifetime benefit limits where permitted by law.

Managed care designs include HMO (closed panel, primary care gatekeeper), PPO (network discounts with out-of-network benefits), POS (hybrid), and high-deductible health plans paired with health savings accounts.

Coordination of benefits determines order of payment when a person is covered by two group plans: the plan covering the person as an employee usually pays before the plan covering the person as a dependent.

Pre-existing condition limitations, waiting periods, and actively-at-work requirements affect when newly enrolled employees and dependents become eligible for benefits.

Plan design balances cost, competitiveness, and adequacy: richer benefits raise premium, so employers trade deductibles, coinsurance, and benefit maximums against cost.

Contributory plans require employee premium sharing; noncontributory plans are employer-paid in full, and participation requirements apply only to contributory plans.

Eligibility design choices include waiting periods (for example 30, 60, or 90 days), minimum hours (often 30 per week), and classes of employees defined by salary, location, or job category.

Flexible benefits (cafeteria) plans allow employees to choose among benefits with pre-tax dollars under a Section 125 plan; a premium conversion feature lets employees pay their share pre-tax.

Funding arrangements include fully insured, self-funded (employer retains risk, often with stop-loss insurance), and minimum premium or administrative-services-only arrangements.

Defined contribution health approaches give employees a fixed dollar amount toward coverage; defined benefit approaches promise a specified benefit package.

Wellness and disease management programs are plan design features intended to reduce claims cost and improve productivity; incentives must comply with applicable nondiscrimination and privacy rules.

Integration with statutory benefits: disability plans offset Social Security and workers' compensation, and retirement plans coordinate with Social Security through integration levels.

Plan documents (summary plan description, certificate of coverage) must accurately describe eligibility, benefits, exclusions, and claims procedures; design changes require timely disclosure.

ERISA governs employer-sponsored group benefit plans: it imposes fiduciary duties, reporting and disclosure (Form 5500, summary plan description), and claims procedure requirements.

COBRA continuation applies to employers with 20 or more employees; qualified beneficiaries may continue group health coverage for up to 18 months (29 months for disability extension), with the beneficiary paying up to 102% of premium.

HIPAA includes portability (creditable coverage, special enrollment), nondiscrimination on health status, and privacy and security of protected health information.

The Affordable Care Act prohibits lifetime and annual dollar limits on essential health benefits, bars pre-existing condition exclusions, and requires coverage of dependents to age 26.

State regulation covers insurer licensing, policy forms and rates, producer licensing, and mandated benefits; state insurance departments enforce market conduct and unfair trade practice rules.

Fiduciary duty requires the plan fiduciary to act solely in the interest of participants, follow plan documents, and prudently manage plan assets; prohibited transactions are barred.

Suitability and disclosure: a producer must recommend coverage appropriate to the client's needs, disclose compensation and conflicts, and avoid misrepresentation, twisting, and rebating.

Client relations best practice includes documenting needs analysis, delivering the certificate and summary plan description, and explaining eligibility, exclusions, and claims procedures in plain language.

Privacy and consent: obtaining authorization before disclosing an individual's health information, safeguarding records, and limiting collection to what is necessary for underwriting or administration.