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Ask the Health Insurance Expert

My employer offers health insurance through an HMO, but it's not available to all the employees. Is that legal?

Although it might not sound fair, it is perfectly legal. Employers are allowed to determine which classes of employees, if any, are offered a health plan. A manufacturing plant, for instance, can choose to offer a health plan to executives and not to shop floor workers. But, all of the employees in the designated class must be offered the health plan; the employer cannot pick and choose which employees in the designated class will be offered the health plan.

In addition, once a health insurance company extends an offer of coverage to an employer, no employee in that class can be excluded from coverage simply because he or she has health problems. The Health Insurance Portability and Accountability Act (HIPAA) provides limitations on the insurance company's ability to impose pre-existing condition exclusions and prohibits discrimination of members of the group based on health status.

When it comes to small-employer group coverage, many states now require "guaranteed issue," which means a health insurance company cannot refuse to cover a group, even if one or more employees or their dependents have health problems. The health status of the employees can be reviewed, but only to set the premiums for the group.

Last updated: Dec. 7, 2009