Under group coverage, a master group policy is issued to the employer who is the group policyholder, and covered employees or "subscribers" receive a certificate or handbook that summarizes the benefits and provisions outlined in the master group contract.
Many group policies provide the option of covering dependent family members. Employers may require eligible employees to satisfy a waiting period of up to 90 days prior to being added to the plan. As the policyholder, the employer does not need the consent of plan participants to change insurance companies, make changes to the plan, or agree to new premiums or benefits. However, North Carolina law requires employers to provide at least 45 days’ notice to their employees when they plan to cease offering health insurance.
North Carolina defines small businesses as those with less than 50 full-time employees. You may be able to get health coverage for your small business one of these ways:
- Directly from an insurance company. You can contact any health insurance company and see plans available in your area. Many have websites that let you compare all plans they sell.
- With an insurance agent or broker. Generally, agents work for a single health insurance company, while brokers sell plans from several. Both can help you compare plans and complete your enrollment. You don’t pay more by using an agent or broker. They’re generally paid by the insurance company whose plans they sell.
- From an online health insurance seller. These services offer health plans from a number of insurance companies. They let you compare prices and features and then enroll with the insurance company.
In North Carolina, large employer groups are those with more than 50 eligible employees. Large group coverage is not guaranteed issue. When a large employer applies for a group health insurance plan, the insurance company may fully "underwrite" that group by requesting health information of the employees that will be eligible for coverage and decide whether to offer or decline group coverage to the Employer. In addition, large group premium rates usually are developed using employer groups past claims history. Once a large group plan is issued, the group plan will have guaranteed renewal rights.
Sometimes employers may offer Health Savings Accounts (HSA) to employees. HSAs are savings funds that allow you to pay some health care costs with tax-free dollars. HSAs let you pay for current medical expenses and save for future qualified medical and retiree health expenses on a tax-free basis. To use a health savings account, you must also have a high-deductible health plan to use with it. Under a high-deductible health plan, the monthly premium is usually lower, but you are responsible for more out of pocket health care costs that can be paid with pre-tax HSA funds.
Fully insured group health insurance policies are offered by licensed insurance companies. The insurance company collects premiums and uses the money collected to pay claims. These types of policies are regulated by the North Carolina Department of Insurance and are protected by the Life and Health Guaranty Association if a licensed insurance company becomes financially insolvent. If this occurs, the Association provides up to $300,000 per person to cover unpaid claims.
Some employers and labor unions provide group health benefits for their employees or members through what is called a self-funded health plan. In a self-funded plan, the employer or group collects premiums itself and uses those funds to pay for claims. While an insurance company or other company may be responsible for administering the plan (provider network, claims processing, customer service, etc.), the employer retains responsibility for making sure that there are enough funds to pay claims. Self-funded health plans do not involve a health insurance policy; therefore, they are not insurance plans, and are not subject to North Carolina insurance laws or the North Carolina Department of Insurance's regulatory authority. In addition, the North Carolina Life and Health Insurance Guaranty Association does not cover self-insured plans in the event of plan insolvency. Single employer and union sponsored self-funded health plans are regulated by the U.S. Department of Labor's Employee Benefits Security Administration (EBSA). The U.S. Department of Labor EBSA can be reached at 866-487-2365.
MEWAs provide coverage to employees of multiple employers in the same line of business. Rather than purchasing coverage from an insurance company, a group of similar employers may jointly establish a self-insured (self-funded) health benefit plan by pooling funds, and then using the pooled funds to pay members' health care expenses. The North Carolina Department of Insurance licenses and regulates these "Multiple Employer Welfare Arrangements" as it does insurance companies. However, the North Carolina Life and Health Insurance Guaranty Association does not cover MEWA insolvencies; if a self-insured MEWA runs out of money to pay claims, its participating employers may be held responsible for those unpaid claims.
An Association is a membership organization provides benefits in exchange for membership dues to persons interested in a specific cause or profession. Such associations include labor unions, credit unions, professional associations, alumni associations, trade associations, and lodges. Members must pay dues to the association to be eligible for insurance coverage and any other benefits offered through the association. In addition, some associations offer many other membership benefits to their paid members.
According to North Carolina Statute, associations shall have at the outset a minimum of 500 persons and shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have been in active existence for at least five years; and shall have a constitution and bylaws that provide that (i) the association or associations hold regular meetings not less than annually to further purposes of the members; (ii) except for credit unions, the association or associations collect dues or solicit contributions from members; and (iii) the members, other than associate members, have voting privileges and representation on the governing board and committees.