In California, a small group refers to companies that employ two to fifty employees. Small group plans enjoy what is known as guarantee issue, and cannot be denied a group health plan based on the health of the owners, employees, or their dependents. While small groups are not required to offer health coverage to their employees, at least for the time being, many employers find that being able to provide health coverage to their employees benefits all.
Requirements for a Small Group Plan:
- 51% must reside in the state of California
- 75% of eligible employees must enroll on the health plan
- Those that are covered under a spouse’s group plan or are enrolled on a Medicare plan are valid waivers, meaning they will not count against the percentages
- Medicare is a primary payer to the insurance carrier for those 65 and older, or enrolled on Medicare due to a disability
- Employees are required to complete a health questionnaire for most carriers in order to determine rating tier
Each state creates its own rating method, while every insurance companydesigns their own specific underwriting guidelines. Overall, small groups are all medically underwritten. This means that the health of the employees and owners alike will play a role in determining the final rates. For example, a company employing six healthy young people will most likely see a lower rating tier than a company employing ten employees several of whom take expensive medications or are diagnosed with complex medical conditions.
Small group plans often allow a multitude of plans to be offered, such as PPO’s, HMO’s and HSA options. Dental, vision, life, chiropractic, and acupuncture benefits are often added as ancillary items. Employers can choose to offer a percentage towards the employee’s premium or a flat dollar amount. This allows the employer to manage their out of pocket exposure and the employee to choose the benefits that suit their particular needs.
Due to the fact that small groups face some of the highest premiums – more than large groups or individual policyholders – many small businesses faced going without coverage. However, the Affordable Care Act provided small employers with the Health Care Tax Credit starting in 2010. The requirements for eligibility are:
- The employer has fewer than 25 full-time equivalent employees
- Employees must have average wages of less than $50,000
- The employer must cover at least 50% of the employee’s portion of the health plan
Determining if your Small Group qualifies for a Tax Credit:
Small group plans are our specialty at Health Exchange Quote.
Call us today or visit our website for a small group quote.
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