Employer Health Insurance Regulations

With rising costs of health insurance and the increasing need to provide quality health insurance coverage, state and federal laws have been put into place to protect an individual's rights with regard to employer provided health insurance. Large and mid-sized employers are often exempted from protection against insurance rate increases, and they are required to fulfill certain responsibilities regarding the level of insurance coverage provided. Certain rules and regulations have also been put in place to protect the rights of employers and insurance companies.

Continuity of Coverage

• Insurance fraud is illegal and may result in jail time.

  Federal regulations mandate that a health insurance carrier cannot refuse renewal of any single employer's health plan if the insurance plan is offered to other employers in the same insurance market. If an insurance provider decides to stop providing a particular plan to an employer, the carrier must allow the employer to enroll employees in a comparable plan that is available. Once an insurance carrier discontinues offering services in a particular market, the insurance company must provide 180 days notice to the employer and to the Insurance Commissioner of that state. Insurance companies may only refuse insurance coverage to an employer or individual employee for reasons of nonpayment of premiums, fraud or health insurance contract violation.

COBRA

• Missed work due to illness can cause employers to discontinue health coverage.

  The Consolidated Omnibus Budget Reconciliation Act also known as COBRA is a program that provides workers and their families the right to continue health insurance coverage if they lose health benefits due to an involuntary job loss. Employees are eligible to enroll in COBRA benefits as soon as they are laid off or experience a reduction in work hours due to illness, personal stress or company practices. Employer-sponsored group health plans with at least 20 employees are required to offer COBRA benefits, and employers are required to notify the employee regarding COBRA eligibility. The employee is responsible for the cost of the premiums, but the option allows an employee and his family to extend insurance coverage during transition to another job or alternate health plan.

Preexisting Conditions

• Employer plans cannot deny coverage for preexisting conditions.

  Preexisting conditions are generally considered to be any type of medical condition present during the six months prior to joining a health insurance plan. Insurance carriers may require a legal 12 month waiting period before extending coverage to new members with preexisting conditions, but coverage must be provided. For employer health insurance plans that offer prenatal care and coverage of childbirth expenses, both state and federal law prohibit an employer health plan from treating pregnancy or genetic information as a preexisting condition.