Page 125 - Group Insurance and Retirement Benefit IC 83 E- Book

The pre-existing conditions provision in-group DI policies is sometimes more restrictive

than its counterpart in individual policies, largely due to the absence of medical
underwriting. However, sometimes the pre-existing conditions provision must be

eliminated from a group DI plan when the plan replaces an existing one under which an
employee had already satisfied the pre-existing condition requirements.

For example, suppose the existing plan did not pay for a pre-existing condition until after

the employee had been in the plan for 12 months. Employee Baxter has met that 12-

month requirement under the existing plan for herniated disk. Now Baxter's employer
drops the plan and installs a new plan with another insurer. The new insurer is prohibited

from imposing another pre-existing condition restriction on Baxter for the disk problem.

Whether or not this restriction applies may depend on state regulations and/or the insurers
involved.

We have discussed a number of desirable benefits and optional riders that are often

available with individual DI policies. Many such benefits and rider options are not
available for group DI policies.

One of the most significant differences between group and individual policies is that most
group DI coverage may be canceled for the entire group at the insurer's option. The

insurance company also may raise premiums for the entire group. You've learned that
individual policies, on the other hand, are often non cancelable and for the best classes of

risks, premiums remain level throughout the policy term. Now we will look in more
depth at group STD and LTD plans.

Short-Term Disability (STD) Plans

In the previous chapter, we discussed salary continuation or sick pay plans that provide

short-term disability (STD) benefits for employees. You learned that one way to fund

such plans is with disability income policies. Another market for STD policies exists in
some of the five states that require employers to provide short-term temporary benefits