A medical insurance question for those in the know.

[Jenny Red Eye]

If a medical insurance company contracts to provide medical insurance to a company's employees, is it legal for them to charge a different premium to employees based on their individual past medical experience, rather than the experience of the entire pool of employees?

Thank you very much in advance for any/all replies.

[elleng]

1. It's a contractual matter,

between the companies, so might be, but not sure of effect of ACA on this.

[Jenny Red Eye]

2. Thanks, Ellen...

I was wondering if there are specific insurance laws that stated that insurance must be non-discriminatory and based on the pooling of risks.

[elleng]

3. Insurance is, by it's nature, based on the pooling of risks,

which is one of the things that might encourage ins. cos. to charge a different premium to employees based on their individual past medical experience.

[Jenny Red Eye]

4. To me. "pooling" means to

put everyone in the same pool, and find the mean or average for the people in that pool to develop a premium. I might be looking at it incorrectly.

[elleng]

5. No, you're correct,

but they might 'skew' the pool. AND, States, have their own laws about this stuff, its not uniform.

[Jenny Red Eye]

6. OK. thanks a lot for the info...

[Mosby]

7. I worked for a large company that charged smokers and overweight employees more

It never changed so I guess it was legal.

A story circulated of a employee who claimed he didn't smoke and then had a medical emergency that landed him in the hospital, they tested his blood per the company and found nicotine, they refused to cover his medical expenses.

[Jenny Red Eye]

8. Oh right! I've heard of that stuff happening quite a bit...

I guess it is legal then.

[Princess Turandot]

9. By 'premium' do you mean the employees' required contribution to their coverage each month?

Insurance companies hired by an employer don't usually charge premiums to individual employees.

If you're referring to the employee contribution, I think that employers can and do make such distinctions, if they are based on accepted/known risk factors that are (theoretically) controllable by the individual, such as smoking/nonsmoking. Are you saying that such cost sharing varies based on each person's condition? i.e. An employee with a chronic condition such as MS, that needs a lot of health/pharmacy services, is individually required to pay more? I don't know if that's legal or not.

[Downwinder]

10. You have differing rates for smokers and nonsmokers.

So, Yes.

[subterranean]

11. No. That is illegal under HIPAA.

The Health Insurance Portability and Accountability Act (HIPAA), prohibits group health plans from discriminating against individual employees in the plan based on health status. They can raise rates for the whole group, but not for individuals.

Reference: http://www.dol.gov/ebsa/publications/yhphipaa.html
(the answer to your question is about 3/4 of the way down the page in Chapter 5)

[SickOfTheOnePct]

14. But it doesn't stop the company from charging the employee more

The overall premium might be the same for each individual, but employers can raise or lower their contribution to the total premium.

[pugetres]

12. I didn't have time to hunt (gotta head to work)

for the federal law this article quoted:

"There are some important limits on what your company’s wellness program can do. More on that soon. But here’s the bottom line: Under federal law, your employer can vary your health insurance premium by up to 20 percent based on a “health factor;” that goes up to 30% as of 2014 and the government could eventually raise it as high as 50%." From this link: http://commonhealth.wbur.org/2012/09/wellness-program-legal-limits

Older article and I'm not sure if the PPACA had any effect on the laws since I've only noted increased rates for smokers and increasing rates as one gets older. I'm not sure if employees are offered the same protection that I receive (I can actually purchase insurance again even though I have a few conditions that made insurers refuse me as a customer for several years! And, they cannot charge me more than any other non-smoker my own age!)

[Jenny Red Eye]

13. Many thanks to each of you who replied. nt