Nondiscrimination Rules
Provisions barring plans from charging or covering differently based on health status, requiring instead rating only on permitted factors.
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Practice This Concept
An employer wants to fund a promise to pay an executive supplemental retirement income after the executive retires. Which life insurance arrangement is designed for this purpose?
A life insurance policy on the executive owned by the employer — Deferred compensation is an arrangement in which an employer promises to pay an employee a specified income in the future, typically at retirement, as a supplement to retirement benefits. To fund that obligation, the employer commonly owns a life insurance policy on the executive's life, pays the premiums, and is the beneficiary. When the executive dies, the death proceeds help the employer meet the promised payments. This is a distinct business use of life insurance, separate from key person coverage or buy-sell funding, and it illustrates how life insurance can guarantee funds for future obligations.
National insurance concept
Under HIPAA's portability provisions, when an employee changes group health plans, the new plan's pre-existing condition exclusion must:
Be reduced by prior creditable coverage the employee had under the old plan — HIPAA's portability rules address the job-lock problem by requiring group plans to credit employees for prior continuous coverage. Creditable coverage, previous employer coverage, COBRA, and other qualifying coverage, reduces any pre-existing condition exclusion by the amount of prior coverage, provided the gap between plans does not exceed the statutory limit. This lets workers change jobs without losing protection. HIPAA is among the federal laws listed in the California A&H objectives affecting group medical plans.
National insurance concept
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