6.2 Michigan Group Health Insurance

The Regulatory Stack

No single law governs Michigan group health; several layers apply at once, and the exam expects you to know which does what.

Self-funded employer plans are largely governed by ERISA and escape state mandates; fully insured plans must also meet Michigan Insurance Code rules. This ERISA preemption is a common distractor on the exam.

Group-Size Definitions

The 1-50 small-group line matters because small-group plans carry the strongest consumer protections:

• Guaranteed issue — the carrier cannot decline a small employer based on the group's health.
• Adjusted/modified community rating — premiums vary only by allowed factors (age, geography, tobacco, family size), not individual health status.
• Essential health benefits, mental health parity, and no pre-existing-condition exclusions.

Exam tip: A 40-employee firm is a small group (guaranteed issue applies) and is above the 20-employee COBRA threshold (federal COBRA applies). Watch the two different thresholds: 50 separates small from large, and 20 separates COBRA from mini-COBRA. A stem can place one employer on both sides of these lines at once.

Worked threshold example

A Michigan retailer employs 48 full-time-equivalent workers. It is a small group (1-50), so any plan it buys must be guaranteed issue with community-style rating and essential health benefits. Because 48 exceeds 20, a departing employee gets federal COBRA (18 months for termination), not mini-COBRA. If the same firm shrank to 16 employees, the small-group protections still apply, but continuation would shift to Michigan mini-COBRA.

Continuation Coverage: COBRA vs. Michigan Mini-COBRA

COBRA (Consolidated Omnibus Budget Reconciliation Act) lets covered persons keep the group plan after a coverage-losing event. It applies to employers with 20 or more employees.

COBRA Qualifying Events and Durations

Mnemonic: events affecting the employee's job = 18 months; events affecting the family/dependents = 36 months.

Michigan Mini-COBRA

For employers too small for federal COBRA, Michigan's state continuation law fills the gap. It generally covers groups with about 2-19 employees, offering up to 18 months of continuation. The covered person pays roughly the group rate. Mini-COBRA is the answer whenever a stem describes a small employer (e.g., 12 employees) and asks how a departing worker keeps coverage.

Mental Health Parity

Federal and Michigan parity rules require behavioral-health benefits to be no more restrictive than comparable medical/surgical benefits.

Parity covers mental health conditions and substance-use disorders. A plan may not, for example, charge a $50 copay for a therapy visit while charging $20 for a primary-care visit.

HIPAA Portability

HIPAA bars enrollment denial based on health status, limits pre-existing-condition exclusions (now effectively eliminated by the ACA for compliant plans), provides special enrollment rights after events like marriage or birth, and protects the privacy of health information. Together these rules make group coverage portable and non-discriminatory.

Coordination of Benefits and Other Group Rules

When a person is covered by two group plans, coordination of benefits (COB) decides which pays first. The primary plan pays as if no other coverage existed; the secondary plan may cover allowable remaining charges, but total payment cannot exceed 100% of the actual expense. For dependent children covered by two working parents, the common tie-breaker is the birthday rule: the plan of the parent whose birthday falls earlier in the calendar year is primary.

Key dates to memorize

Memorizing this grid lets you answer most Chapter 6 group-health questions on sight, because the exam recycles these exact thresholds in varied scenario wrappers.