Exclude sick employee to get better group rate?

[Flyboyjohn]

This doesn't pass any smell test but I can't find the legal prohibition:

Large group health plan has terrible claims history based on 1 particular employee

Insurer telling employer "If we don't have to cover the sick employee your group renewal rate increase is only X% but if the sick employee coverage continues the group rate increases by 3X%"

Employer obviously wants to exclude the sick employee from coverage (and raise his wages by enough to cover his premiums for Marketplace coverage where his pre-existing conditions don't matter).

This has to violate somethng?

[GBurns]

I suggest that you look at:

1. Your state health insurance law.

2. ERISA especially section 510.

3. FLSA especially section 18C if the employee gets a subsidy by taking the Marketplace coverage.

4. ADA

5. EEOC.

In short, you will have a major problem because you are interfering with the employee's right to participate in the plan/receive benefits and you are discriminating against the employee for a sickness etc.

[lvena]

I have seen this done in the past, but with a slightly different twist. Group had a self-funded plan and a fully-insured HMO plan. If a person in the self-funded plan exceeded a certain threshold of claim cost they were forced onto the HMO. So my gut tells me that it may still be possible, but cannot verify for you.

Agree with G Burns, there are so many laws that come into play that this could easily blow-up in the employer face. If they are even slightly considering doing this, they should seek out legal advice.

[rcline46]

Just for fun, get the person who is suggesting that strategy from the insurance company to put the recommendation in writing and countersigned by his/her manager.

[KED]

HIPAA nondiscrimination rules