WHAT’S REQUIRED TO QUALIFY FOR SMALL GROUP HEALTH INSURANCE IN CALIFORNIA?
There are requirements needed to qualify for guaranteed issue coverage otherwise the market would have issues.
The three main ones are following. These are three most common to cause issues if there are any for new group.
You can always run your California Employer health quote here:
We Need At Least One Person Officially Connected To The Company For Half Of The Prior Calendar Quarter PLUS One Non-Spouse On Payroll
This requirement usually poses a roadblock (or hurdle) for smaller companies and especially family owned companies.
Most of these companies are Sole proprietors which means that in the eyes of the law (and the health insurance carrier), there’s really only one person tied to the company officially.
Most family businesses do not put the other spouse on payroll due to cost. We either need payroll or some type of ownership (partner, officer, etc).
“half the prior calendar quarter”.
Start-up companies usually run into this issue.
We need the two people mentioned above for at least have of the prior calendar quarter.
For example, if you want a April 1st effective date, the two people must be officially tied to the company (payroll ideally with DE6, Statement of Information listing officer with stamp by State, etc) by Feb 15th.
Otherwise, it pushes us out to July 1st (the next calendar quarter).
Each company’s structure and timing is unique so it’s a good idea to run your situation by us to really understand the timetable and requirements.
Out of State or Foreign Corporations.
We often have companies which are incorporated in other States or who are setting up an office in California for which they need California group health insurance.
In this case, we generally need a Certificate of Qualification in California which allows the company to operate here.
Keep in mind that the carriers will look at the official stamped filing date and not the filing date to establish the “half of prior calendar quarter” requirement mentioned above
For LLCs, the carriers typically look at the stamped date from the State for documents listing the Managers although we might find subtleties in requirements from the different carriers.
We Need At Least 75% Of The Eligible Employees/Owners To Enroll On The Plan
This is the next big requirement that trips up some companies. If too many eligible employees decline coverage (for example, due to cost), we may not be eligible.
Let’s define what an eligible employee is (and is not).
1099 Contract workers are not eligible and therefore do not figure into our 75% calculation.
1099 workers are not eligible to join a California group health insurance (other than their own if eligible).
Part Time employees.
This depends on what the carrier opts for. A company can choose to cover part time employees (below 30 hours weekly). If part timers are included, they will be calculated into the 75% requirement.
Other employees not included.
If a person is on another group health insurance plan (say through spouse) or on Medicare, we do not need to consider them in our calculation although they are eligible to join the group plan.
So where do we see issues?.
With a small company, let’s say we have 3 eligible employees and one does want to join.
In this case, we have 66% participation and may not be able to form a group plan.
Variations To The Participation Rule
The carriers are testing different participation rules (50%, 25%, etc) so check with us on your particular situation.
Also, as a result of the ACA law, there’s a special year-end Open Enrollment window during which some of the Eligibility requirements may be waived.
Check with us if you feel you are unable to meet the main requirements.
One other note…the carriers have different requirements for the number of employees being in California (versus other States) that run from 25% to 51%.
The Company Must Pay At Least 50% Of The Employee Premium.
The company must pay 50% of the employee (not dependents) premium. A company can do this as a fixed dollar amount or percentage of a given plan (or any plan of choice) as long as the company does not discriminate.
Take advantage of our experience in the group market by requesting a full proposal for your company.
It is advisable to speak with your California health insurance agent or broker about your particular company’s situation to see if you qualify.