Work-Based Insurance

WORK-BASED INSURANCE: WHAT’S AVAILABLE AT THE WORKPLACE?

Ronda B. Goldfein AIDS Law Project of Pennsylvania

For a person with HIV/AIDS who is entering or returning to the work force, employee benefits are among the most important factors to consider when accepting an offer of employment. The prospective employee should be encouraged to ask for details about the benefits package and carefully consider whether the insurance will meet his or her health-care needs.

I. Common Employer-Provided Benefits

A. Health 1) Traditional indemnity - Employee may see any provider that accepts the insurance. Referrals not required.

2) HMO - Employee selects provider from a network. Referrals may be necessary to see a specialist.

3) Flexible Saving Accounts - Employee may choose to deposit a portion of his or her pre-tax salary into a FSA to be used for dependent care assistance, adoption assistance or medical care reimbursements. FSAs have an annual limit on the maximum deposit and a “use-or-lose” rule.

B. Disability – (Income replacement) 1) Short-Term disability (STD) – A limited benefit that generally does not exceed 26 weeks. Amount of payment depends on policy. Brief elimination period until benefits begin.

2) Long-Term disability (LTD) – Benefits may extend until age 65, although mental health benefits are often capped at a two year life-time limit. Payments are usually between 50% and 66 2/3% of income, and may be offset by Social Security disability benefits. The elimination period can be as long as 26 weeks.

C. Life 1) Term – Coverage for a specific period of time. At end of term, the policy has no value.

2) Whole (or Universal) - More expensive premiums, but policy accrues a cash value. Insured may borrow against policy.

II. Group Insurance vs. Individual Insurance

A. Group 1) Limited or no medical underwriting [ME, MA, NY, NJ, VT have with no underwriting on individual plans]

2) Limited or no pre-existing condition exclusions

1 3) Lower premiums

4) Broader coverage

B. Individual 1) Greater control on sensitive information

III. Non-Discrimination in Health Plans

A) Health Insurance Portability and Accountability Act of 1996 (HIPAA) Group health plan may not establish rules of eligibility, charge greater premium or delay enrollment based on employee’s health. 29 U.S.C. §1182 (a)(1),(b)(1)(2005).

B) Americans with Disabilities Act of 1990 (ADA) 1) Title I - Discrimination prohibited in all aspects of employment including fringe benefits. An employer may offer different insurance plans based on employee’s health as long as all plans offer comparable benefits. Anderson v. Gus Mayer Boston Store, 924 F. Supp. 763, 769 (E.D. Tex. 1996).

2) Title III - Split of authority of whether insurance is a public accommodation. Carparts Distribution Center, Inc. v. Automotive Wholesaler’s Association of New England, Inc., 37 F. 3d 12 (1st Cir. 1994).

3) Section 501( c ) -“safe harbor” protections do not prohibit or restrict insurer from underwriting or classifying risks.

4) EEOC’s 2000 Compliance Manual distinguishes between disability- based distinctions and health-related distinctions for purposes of underwriting. http://eeoc.gov/policy/docs/benefits.html

C) Federal Rehabilitation Act of 1973 (Rehab Act) - Covers discrimination in federal government benefit plans and plans receiving federal funding.

D) Employee Retirement Income Security Act of 1974 (ERISA) - Applies only to discriminatory actions taken for the purpose of interfering with employee benefits.

E) State anti-discrimination laws

IV. Confidentiality in Insurance Plans

A) Applying for Employer-Provided Insurance

1) What information may be requested? a) Unlimited health information can be requested, but the employee may seek special handling for sensitive information. b) Truthfully answer the questions that are asked. No obligation to provide information, beyond what is requested.

2 c) An incorrect response may result in a policy rescission if constitutes a material misrepresentation.

2) Where does the information go? a) Medical Information Bureau (MIB) b) Employer - requested information is subject to privacy protections of ADA, HIPAA, etc., but volunteered health information may not be subject to same protections.

3) Self-insured employer

a) Health information may be collected, but it is subject to confidentiality protections and may not be used for a discriminatory purpose.

V. Denial of claim for coverage

A) Review terms of policy for appeal procedures

B) Review state insurance and contract laws

C) Review federal laws

1) Employee Retirement Income Security Act (ERISA)

2) Health Insurance Portability and Accountability (HIPAA)

3) Americans with Disabilities Act (ADA)

4) Rehabilitation Act