My article regarding both ARRA and Association Based Insurance Carriers: Domiciled Carriers of Florida vs. Association Insurers
So, below you will find some IMPORTANT excerpts from the Florida law which is indicative of the entire country and like resources in which you may be able to access in its entirety by going to the link. This may seem BORING to some, but SO VERY IMPORTANT, and I did most of the boring research for you, all you have to do is READ THE KEY points and you may just run into something that is worthwhile looking into further.
For instance, United Healthcare is domiciled in Indiana; while their insurance plans have their advantages they also have their disadvantages as any other insurance carrier. However, my concern lies mainly in the fact that they are not domiciled carriers of Florida since they are association based and are essentially exempt from rate regulation. I am not going to delve into neither the advantages nor disadvantages that may exist in their insurance plans; although I feel it is imperative that this fact be expressed explicitly.
The policyholders who are aware that they are paying an additional $3.00 a month on their premium (the monthly dues to the association in this scenario it would be FACT an independent consumer association) feel that the $3.00 FACT fee grants them discounts on an array of services that include anything from vision services to amusement park discounts.
In addition, they may be under the misconception that they have lower premiums since they are part of a group association which would subsequently assume a bigger risk pool – hence the “lower premiums”. And that’s about as far as I’ve heard from both consumers and most agents if that; so here’s the catch, and the underlying element of the plan that no one seems to know.
This is an excerpt derived from a publication in which was basically a review of Florida laws in relation to rates and individual insurance coverage:
Out-of-State Group Policies —The state law generally exempts out-of-state
group policies from rate regulation.11 The rating requirements described above
do not apply to such policies, which are marketed to individuals in Florida, but
are issued to a group or association outside of Florida. Insurers issuing out-of state
group policies may engage in rating practices that state law prohibits for
policies issued directly in the state, except that the small group guaranteed-issue
and community rating requirements apply to coverage sold to a small employer
in Florida under an out-of-state trust or association policy. Functionally, this
product is very similar to individual coverage. An individual contacting an
insurance agent to purchase health insurance will often be offered coverage
under an out-of-state group plan and the consumer is not likely to know the
difference, even though the policy itself must contain disclosures that state law
does not apply.
The protection of the Florida Life and Health Guaranty Association applies depending on the geographic location of the legal headquarters of the company (referred to as where the company is domiciled).
If an insurance company is domiciled in a state, it is referred to as a “domestic insurer .” If a company is domiciled outside of the state, it is referred to as a “foreign insurer .” If a company is domiciled outside of the United States, it is referred to as an “alien insurer.”
By Florida law, the Association can assist when a domestic insurer is deemed impaired or is liquidated by court order. In the case of a foreign insurer, the Association can assist only when the company is liquidated.
For companies domiciled in Florida – Annual and Quarterly Financial Statements are required by Section 624.424, Florida Statutes, and are due by March 1st for the prior year’s experience. The quarterly financial statements are due May 15th, August 15th and November 15th. A Financial Examination is also conducted once every three years.
When financial concerns exist, the frequency of reporting can be increased to monthly.
Companies domiciled outside of the state have the same reporting requirements. However, financial examinations are typically conducted by the domiciliary state. When financial concerns exist, the frequency of reporting can be increased to monthly.
This law was derived from : The Health Insurance Law
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