Group Health Insurance
How group coverage works
The employer holds the master policy and employees receive certificates. Group underwriting evaluates the whole group rather than individuals: size, industry, prior claims experience, and participation requirements (typically 75% of eligible employees for contributory plans). Employees pass a probationary or waiting period, and many plans require being actively at work on the effective date. Open enrollment allows additions without evidence.
Rights on leaving
Conversion privilege: the employee may convert to an individual policy within 31 days without evidence of insurability. COBRA continuation applies to employers with 20 or more employees: 18 months for termination or reduced hours, 29 months when the qualified beneficiary is disabled, and 36 months for divorce, legal separation, death, Medicare entitlement, or a dependent child losing eligibility. The election period is 60 days and the premium may be 102% of the group rate.
Rating and rules
Experience rating for large groups, community rating for small groups and individuals. HIPAA provides portability and special enrollment rights. Coordination of benefits determines which plan pays first (birthday rule for children). Nondiscrimination rules govern cafeteria plans and self-funded arrangements.
Traps
COBRA is often tested with wrong month counts, and the 20-employee threshold is measured on a typical business day in the prior year. Conversion is a right, but it produces a new individual policy at individual rates.
Rule of thumb
18/29/36 - termination, disability, dependents.
Worked example
An employee resigns after four years. She may elect COBRA for up to 18 months at up to 102% of the premium, or convert to an individual policy within 31 days without underwriting.