California Group Health Insurance Guidelines |
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California Group health insurance plans offer many advantages such as guaranteed issue coverage. Please note that there are certain rules and qualifications you must meet in order to be eligible for GROUP coverage. Group insurance is for employers with 2 or more eligible employees.
Contribution: All group plans require that the employer pay at least 50% and sometimes 75% of the employee premium. You are not allowed to offer a plan to your employees and have them pay the entire premium.
Participation: Typically, the insurance carrier will require that 70 to 80% of all eligible employees enroll in the plan. This is not a plan where only those who want it enroll. The GROUP is enrolling and typically only those with other GROUP coverage can waive coverage. Coverage with Medi-cal is not a valid reason to waive your employer plan. Anyone can waive coverage, BUT if that percentage (less those covered under another group plan) can not be greater than 25%. Employees must elect now to add dependents or be postponed coverage for their dependents based on open enrollment or current group guidelines. This can be as long as 12 months after they submit a request to add dependents.
Bonified Employee/ DE-6: Only employees that are owners or on the payroll are eligible for coverage. A copy of your DE-6 quarterly wage report is required. This allows the insurance carrier to verify employment and employee participation. If you have multiple locations or wage reports, they must all file under a consolidated tax return. People paid on a 1099, commission only basis are typically not eligible.
Workers Compensation Coverage: The state law requires that employers carry workers compensation coverage. Owners can elect out of the plan in most cases.
Rate Adjustment Factor and guaranteed issue health insurance: Current law requires that California health insurance carriers issue coverage to employers with 2 to 50 employees regardless of health status, assuming they meet the standard group insurance requirements. The law does allow the insurance company to adjust their rate up or down 10%. This means that if you have 4 employees, 2 of whom are pregnant, one who just had by-pass surgery and the 4th is an insulin dependent diabetic, the insurance carrier will issue coverage to this employer with a 1.10 rate. Just the size of a small employer (2-9 employees) is sometimes enough to warrant the higher, 1.10% rate in the eyes of the insurance company.
AB1672 treats all clients the same regardless of how or from whom the policy is purchased from. One agent can not secure a lower rate than the next. Going direct to the carrier will not lower your rate. The primary difference is the competence of your agent. You should expect your agent to assist in processing applications, be accessible for questions and keep you informed. The renewal process should include a review of the new plan and rates along with an overview of other health plans options.
Please feel free to ask questions. I look forward to serving you.
Sincerely, Patrick D. Reaume, CFP, RHU
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