Wednesday, December 15, 2010

Freedom of (from?) Association

From the mailbag:

"Something that I have counted on for 12 years is changing. The [State] Bar Association is dropping its group health plan effective 12/31/10.

Oxford insurance, which provides health coverage to the [State] Bar Association, has dropped coverage to the 60 members who are in the group. We have all aged, some members have major health issues, probably all of us have some minor ongoing health issues, and apparently are no longer a good risk. I have been covered by this plan for the last 12 years, since I became a solo practitioner. Now, with less than 30 days notice, I am scrambling to find alternate coverage or find an of-counsel relationship to become part of a law firm "group."

What are my options with regard to the [State] Bar Association on whom I have counted for my coverage for so long? Should I ask them to file suit against Oxford (what grounds)? Any suggestions of possible options would be much appreciated.

Thanks for any and all suggestions

Thanks, Karen [not his/her real name] for your email; we'll do our best to answer your questions.

You've already answered why this has happened: "the 60 members who are in the group." Add in major (and minor but chronic) claims and an aging population, and what carrier would choose to stay on this risk? The sticking point is that little word "choose:" in most circumstances, the carrier has no such choice.

But this is an Association plan, so there's a loophole:

When you purchase coverage through an Association, rather than on the open market (preferably through a professional, independent agent), you're not a "policyholder," you're a "certificate" holder. There's a world of difference: a policyholder has a direct contractual relationship with the insurer, with specific rights and protections which a certificate holder lacks. Policyholders can (generally) be cancelled only for failing to pay premiums, for fraud or if the carrier goes bankrupt. In the latter case, one generally has recourse to the state's Guaranty Fund.

A certificate holder, however, has none of these rights. The organization (association) is the policyholder, and the carrier can drop it like a hot potato pretty much any time it wants (with proper notice, of course). If you could prove that the association didn't receive the proper notice (eg the policy says 60 days and they only gave 30), then the association (not you) may have a leg to stand on, but I would be very surprised if that were the case.

I don't know much about [your state's] insurance issues, but I would have to guess that being "of counsel" will have little effect on your ability to glom onto a larger firm's group coverage. After all, you'd still be an independent contractor, and most likely ineligible. Which is not to say that you shouldn't ask, but don't get your hopes up too high. Keep in mind, too, that you'd still be at the mercy of someone else's insurance buying (and shopping) decisions: what if the new group's plans become too expensive, or they don't offer a plan that fits your needs?

All of which to say: buy your own insurance. Consult with a local, professional independent agent, preferably one with at least 5 years of relevant experience. Don't know one? Then ask your relatives, your friends, your colleagues for referrals.

You'll be glad you did.

[Special Thanks to Bob, Bill and Mike for their help on this]
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