The Skinny On Guaranteed Standard Issue Insurance
A Guaranteed Standard Issue is a term in underwriting used to describe the fact that a group insurance contract was issued without reference to any medical underwriting. Thus, all group participants are covered regardless of health history and any pre-existing illnesses.
It further means that a policy can cover Critical Illness or Long Term Disability that involves a number of individual policies bound together to gain the benefits that group policies receive.
It is very beneficial for employees as they are assured of full coverage even if they are coming from a small company. The employer can provide them this type of health coverage to further motivate the employees and ensure that the operation of the business is not jeopardized as the employees are also protected.
However, unlike a group insurance, each contract remains individually owned and is therefore fully portable. This is advantageous on the part of the employee, who do not need to worry about any future debt caused by medical expenses.
Current healthcare costs are constantly increasing that employees are worried of how they can avail of a health insurance company, who will be willing to pay for their medical bills as they undergo treatment.
A very good feature when availing of a guaranteed standard issue is that individuals are not required to provide medical evidence to obtain coverage, although there can be a clause on some pre-existing conditions.
These so-called conditions are defined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) as any physical or mental condition for which medical advice diagnosis care or treatment was recommended or received within a six month period ending on the enrollment date. Examples of these are stroke, liver disease, AIDS, pregnancy, depression, cancer, and kidney disease among others as identified by the health insurance company.
As coverage for a guaranteed standard issue is obtained as a group of individual contracts, a group discount is applied to the premium, which can vary between 5% to 15% depending on the policy provider.
The guaranteed standard issue coverage includes a comprehensive list of services, including hospital and physician care, maternity care, prescription drugs, and mental health services, but imposes lower cost sharing than the basic health plan.
This is because health insurers are mandated to accept any small employer who applies for coverage – regardless of the group’s claim history or health status.
While this sounds good, it is an incentive for healthy groups to wait until they are sick before they buy insurance. However, it always pays to be ready instead of waiting for any illness to strike any member of the group. Furthermore, most of the very small employers, especially those baby groups of 10 employees and under, often wait until one of their employees’ needs coverage before obtaining it. And the bad thing is that when healthier employers take their money out of the system and sit on the sidelines, rates can skyrocket and employers will drop the coverage to the detriment of the rest of the employees.