California health insurance - California Group health insurance - Company Size and Group Health Insurance

Company size and California group health insurance

ACA Update: Small group now covers 1-100 employees

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How does the size of your company affect options for California group health insurance?

The number of employees you have in your company not only affects the health plans available to you and it can and will affect your rates as well.

It is important to understand how your company size affects group health coverage for your company.

First, what is Small Group health insurance versus Individual/Family or Large Group

Some history first...

California is unique in that it passed AB 1672 in 1999.

AB 1672 has important rules and regulations for companies with 1-50 employees.

Essentially, within AB 1672, there are protections for this size group in regards to guaranteed issue, guaranteed renewal, and rate increase limits.

Larger than 50 employees was deemed "Large Group" and the plan options are completely different than those with 1-50 employees.

One note...by 1-50 "employees", this includes owners and officers as well.

Keep in mind that the majority of companies in California have an average of 3-5 employees.

Small Groups are the base for our economy.

There are also many single person groups (sole proprietors for example) but the group market options are not extended to them.

A quick synopsis of the main protections provided by AB 1672 for Small Group with Employees of 2-50 employees/owners

The new ACA Rules (Current)

Many things have changed.

Small Group is now 1-100 employees
We need a non-spouse or owner on payroll
RAFF ratings have gone away

You can find much more information on the new guides for group health plans here.

Guaranteed Issue

Basically, this states that a company cannot be declined or denied coverage if they meet the eligibility requirements regardless of health or type of industry.

Guaranteed Renewal states that a California group health insurance carrier must renew a group health plan for a small business, as long as two conditions are met:

There has been no fraud with the policy and
All the premiums have been paid.

Rating protection and the ACA law

Since the ACA law passed, there are no longer RAF or Risk Adjustment Factors.

Before, a carrier could increase or decrease this factor by 10% based on the size and health of the group.

That no longer applies.

Every company has one rate basis now.

Cafeteria plans for Small Businesses

Some carriers have the option to offer multiple group health plans to each employee in a group.

For example, Anthem Blue Cross's Employee Elect allows Small Groups to offer most of suite of plans to each employee all the way down to 2 employees.

Other carriers only offer this flexibility for certain size groups. Employee Elect has really been hard to beat on the market as it can provide a fixed budget for the employer and complete flexibility and choice of health coverage to each employee based on his/her health needs