Do employers look at health insurance usage, and use that data to possibly lay people off for incurring too much usage?
1) Would such a practice be legal 2) Even if it were illegal, could employers be using such data regardless?
Thanks
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3) Why would an employer even care enough to do this, considering it's the insurance company (not the employer) who's paying insurance claims?– cHaoNov 15, 2017 at 22:25
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Smaller employers participate in groups, and the premium is determined by the groups' usage (I believe so). Insurance company is not going to cover you at a loss. You may incur large expense one year due to operation etc.– Sir FartsalotNov 15, 2017 at 22:40
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Premiums are based on risk factors, though, not actual usage. Your employer's group plan's premiums don't go up just because one of its employees had a particularly unlucky year.– cHaoNov 15, 2017 at 22:46
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And yes, if you have just about any medical condition worse than the sniffles, you're a net loss for the insurer for that year. And they have to cover it. That's one of the costs of being able to charge $hundreds/month to a captive audience of people who rarely get sick or hospitalized.– cHaoNov 15, 2017 at 22:56
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1I think the question needs to be divided up. 1: Can health insurance companies legally set premiums based on their actual expenditures? 2: Can they report named individual "expenses" (relative contribution to group premium) to the employer? 3: Can employers terminate an employee because they contribute too much to the overall rate.– user6726Nov 15, 2017 at 23:21
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1 Answer
The "Privacy Rule" of HIPAA would prohibit this from happening. §164.504(f)(2)(ii) imposes requirements on group health plan documents (agreements), which must
Provide that the group health plan will disclose protected health information to the plan sponsor only upon receipt of a certification by the plan sponsor that the plan documents have been amended to incorporate the following provisions and that the plan sponsor agrees to
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(C) Not use or disclose the information for employment-related actions and decisions or in connection with any other benefit or employee benefit plan of the plan sponsor;
We can infer from this that the insurer could disclose to the sponsor such details (since the sponsor must agree not to use it to e.g. fire people).
