The company we work for, as with many others, has been having some tough times financially lately. Not surprising, what with the economic downturn and all, but still somewhat stressful, particularly to the company management whose job it is to figure out how to keep the company going. So, of course, they've been looking for ways to cut costs during this whole recession thing.
One way they found was to outsource our employee medical, dental, and payroll administration to what's called a "Professional Employer Organization," or "PEO." Basically, the PEO hires all your employees away from you, then "leases" them back to work for you. The amount of the "lease" pays for the insurance premiums, payroll, and a little sum left over to the PEO for handling all the paperwork.
"Sounds like a lot of hassle," I hear you cry. "Why would you bother?"
Well, it's like this. Say you've got a company with 20 employees. You are, to put it mildly, going to be screwed (without, I might add, so much as a kiss) by the insurance companies when you try to offer your employees medical coverage. However, if you're a company with 500 employees, the insurance companies will at least bring some Astroglide and maybe even offer to call you later. Since everyone at your company (and several other companies) officially work for the PEO, the PEO has a lot more employees and can negotiate much smaller rates for much better coverage than the small company could on its own.
In short, going to the PEO would not only save the company a lot of money, but would also enable them to save their employees some money and offer them a bigger choice of programs than they were before. It was a no-brainer.
Now, there's a law in this State that when an employer switches from one insurance plan to another, the insurance company must cover all employees just as they did before the switch. In other words, they can't call anything a "pre-existing condition" if it was being covered before the switch. Everyone figured this kind of switch would qualify under that law.
But you see, insurance companies LOVE "pre-existing conditions," because they do not have to pay for treatment for them. And if there's any way possible that they can call anything a "pre-existing condition," well, it's a bit like, (to paraphrase the inimitable Spudnuts) "steak-knife in the EYE. Legal-law style."
The whole PEO thing is kind of a loophole which allows more small businesses to offer medical benefits to their employees. Unfortunately, some people did some checking and discovered that, in fact, there's another loophole. Since we were all switching employers, and not just insurance plans, the insurance company didn't have to cover anything that had been diagnosed in the last year if the employee in question hadn't had continuous coverage for the last year.
Guess who didn't have continuous coverage for the last year, being that he had just qualified for our health plan? Yup. Jim. Guess who's just been diagnosed with a life-threatening condition requiring very expensive treatment, and whose condition was about to be called "pre-existing" and not covered? That's right. Same guy.
I don't even like to talk about what happened when Jim got this news. The way it sounded to him was like, "Yes, we know you just got medical coverage in time to be diagnosed with cancer, but looks like you're going to lose it come January first. Have a nice day."
And it hit him pretty hard.
(To be continued ...here.)