Can Health Insurance company increase their rates?

[gkisystems]

What is the name of your state (only U.S. law)? Illinois.

Illinois General Assembly - Full Text of Public Act 095-0958

My fiancee is under the age of 26 (she is 23) and lives in Illinois with her parents as a dependent. While enrolled as a full-time student, she was covered under her parent's family health insurance plan. Because she just graduated in December 2009, the insurance company told her that she was no longer eligible for coverage in spite of the new law (Public Act 095-0958) going into effect - UNLESS her family was willing to pay DOUBLE the insurance rates.

Effectively, the insurance company is trying to get around Public Act 095-0958 by increasing the rates so high that it is not financially feasable for her to remain on the health insurance coverage. Is this illegal?

She is unemployed and does not have her own health insurance plan.

 

[gkisystems]

(g) No exclusions or limitations may be applied to coverage
elected pursuant to this Section that do not apply to all
dependents covered under the policy.

Wouldn't this mean that they cannot charge anymore for my fiancee over and above what they charge for the other dependents on the policy (her siblings that are under age 18 and/or over 18 and still full time students)?

 

[ecmst12]

You are misunderstanding the situation completely. She is no longer eligible for coverage on this policy since she is no longer a student. She is now eligible for COBRA, which is a lot more expensive. The rates have not changed, the difference is her parents' employer is no longer paying a portion of her premium. She is now essentially being offered her OWN policy with the same coverage as before, but she has to pay for 100% of the premium plus 2% administrative costs.

 

[gkisystems]

You are misunderstanding the situation completely. She is no longer eligible for coverage on this policy since she is no longer a student. She is now eligible for COBRA, which is a lot more expensive. The rates have not changed, the difference is her parents' employer is no longer paying a portion of her premium. She is now essentially being offered her OWN policy with the same coverage as before, but she has to pay for 100% of the premium plus 2% administrative costs.

No, it is not COBRA nor is she eligible for COBRA.

The law essentially removes the full-time student requirement AND also extends the age limit from 18 to 26 (except for military vets which would be age 30).

The question the remains is if the insurance company can add extra fees/costs for people now eligible for insurance under this new law.

 

[ecmst12]

Chances are this is a self-insured policy which is not subject to state law at all.

 

[gkisystems]

Chances are this is a self-insured policy which is not subject to state law at all.

The policy is subject to the state law.

It is an insurance policy provided to her father through his employer. The policy is a family policy where his wife and dependents are covered. The 4 siblings (1 full-time student over age 18 and 3 children under age 18) are included in the same coverage that my fiancee had.

My fiancee is eligible for this same coverage, but not for the same price - at a price so high, she essentially is not elgibile for coverage for practical purposes.

This practice violates the spirit of the law, but I am also trying to figure out if it violates the letter of the law.

 

[Zigner]

(f) Nothing in this Section shall prohibit an employer from
requiring an employee to pay all or part of the cost of
coverage provided under this Section.

ETA: Question: When did this insurance policy take effect?

 

[ecmst12]

How do you KNOW it's subject to state law? 95% of employer sponsored policies are self insured.

 

[cbg]

I think 95% is overstating it a tad, but I would like to know how the poster knows that the policy is subject to the provision in question; also why they claim it is not COBRA.

 

[gkisystems]

(f) Nothing in this Section shall prohibit an employer from requiring an employee to pay all or part of the cost of coverage provided under this Section.

This is not disputed. The health insurance premiums are partially paid by the employer and partially by the employee. Assuming there is no additional cost to add my fiancée on this policy, the premiums charged to the employer and employee will not change. In fact, the only possible way the premiums charged to the employee could change is if the insurance company changes the premiums. It has nothing to do with the employee/employer split of those premiums.

ETA: Question: When did this insurance policy take effect?

The insurance policy has stayed fairly constant for many years (other than the costs increasing) and is renewed every year on January 1st. So, to answer your question, 01/01/2010.

How do you KNOW it's subject to state law? 95% of employer sponsored policies are self insured.

“The law will affect ALL insured business, including HMO and individual business, as well as self insured counties, municipalities and public school districts.” This is according to the FAQ here:

http://www.benico.com/docs/illeg_hb5285_faqs.pdf

The employer is not self insured. The insurance is provided by a private company called Health Care Service Corporation.

I think 95% is overstating it a tad, but I would like to know how the poster knows that the policy is subject to the provision in question; also why they claim it is not COBRA.

A person is only entitled to COBRA when a qualifying event occurs such as employment termination. No qualifying event has occurred. COBRA is a temporary extension of benefits that last up to 18 months. Public Act 095-0958 requires coverage for dependents up to age 26 (formerly 18) which is 96 months. Public Act 095-0958 and COBRA are two completely different things.

 

[cyjeff]

Why would a graduated adult with a degree still be considered a dependent for insurance purposes?

 

[gkisystems]

Why would a graduated adult with a degree still be considered a dependent for insurance purposes?

Why would she not? She is unmarried and younger than age 26 which meets the requirements.

Additionally, she is unemployed with no income, lives at home, gets more than 50% of her support from her parents, and currently has no health insurance coverage.

 

[cyjeff]

Why would she not? She is unmarried and younger than age 26 which meets the requirements.

Additionally, she is unemployed with no income, lives at home, gets more than 50% of her support from her parents, and currently has no health insurance coverage.

And she is prevented from getting her own job/insurance why?

 

[cbg]

Although the laws are changing, it is still quite common and quite legal in many states for there to be a requirement that a dependent over the age of 18 to be enrolled in school full time before they can be considered a legal dependent for purposes of being on their parents' insurance.

 

[ecmst12]

How do you know the employer does not self insure? The fact that there is an insurance company involved means nothing - they could merely be acting as a third party administrator, paying claims with the employers money. This is a VERY common setup. And it would mean they are exempt from the law since they are NOT a self insured COUNTY, MUNICIPALITY, or SCHOOL DISTRICT, they would be a self insured private company.

The qualifying event was her graduating from college and so losing her eligibility as a dependent under her parents' plan. What she is being offered, I am 99.999999% sure, is Cobra.