For Businesses Groups

SMALL BUSINESSES

1-100 EMPLOYEES

LOWER PREMIUMS

MORE EXTENSIVE COVERAGE

100% TAX DEDUCTIBLE

California small business health insurance regulations

According to California health insurance laws, small group health insurance must be made available to be sold to any small business who qualifies for group insurance. Not only that, but any small business with 1 to 100 employees must be offered the same California small business health insurance policy the insurance company sells to other small businesses.

There is one condition California health insurance companies can impose, if they so choose. Specifically, this requirement is that a health insurance company in California may require a minimum enrollment for your California small business health insurance. If the insurance company implements this rule, a certain percentage of employees in the company, or members of the group, must purchase health insurance through the group health plan, or the policy will be rescinded.

Besides regulating who is eligible for California small business health insurance, according to your California health insurance laws it is illegal for any health insurance company to charge higher premiums due to the health status of the group’s members. However, premiums can vary due to the group’s age, family size and geographic location.

Finally, California health insurance companies cannot cancel any California small business health insurance policy because an employee becomes ill.

How a small business health insurance plan will help

If you own or belong to a business or organization of between 2 and 50 people, chances are you qualify for (and would benefit from) a group health insurance plan.

Small business health insurance has lots of benefits. Besides providing medical care for yourself and your employees, a small business health insurance plan helps spread the financial risk between all the members, which usually means lower premiums and more extensive coverage for everyone in your company. This is a clear win-win situation.

Additionally, group health insurance has tax advantages too. Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees will save on their payroll taxes.

Certain other groups, such as non-profit organizations, are also generally eligible for group health insurance so long as they can demonstrate that they have two or more full-time taxable employees.

The cost of small business health insurance

What about the bottom line, you ask? It is no more or less than simply this: group health insurance is less expensive than a bunch of individual policies. This is a fact. However, it still is not cheap. No health care in America is.

The employer will be required to pay some percentage of an employee’s individual premium, which is often 25% or 50%, depending, again, on the state’s laws and the insurance company. Also, if the employee wants to extend coverage to a spouse or dependent, the employer may choose to pay a percentage of that cost, but is not required to do so. You will likely have several policy and payment options from which you can choose.

Designing a small business health insurance plan

To get an accurate quote on a small business health insurance policy, you will need reliable information about both the type of coverage you seek and the vital statistics of the group members who want to be insured, including the number of dependents they would like to include.

Not having all this information on hand is not a problem as you will be asked only for estimates to shop for quotes. No price is set in stone until you sign your name to paper…everything is an estimate until then. Just keep in mind that the more accurate the information you provide, the more accurate the quote.

MID MARKET BUSINESSES

Mid-Size Group Health Insurance Overview

Also referred to as “mid-market” group health insurance by some insurance companies, mid-size group health insurance may offer more plan choices than those offered to small groups. Each health insurance company may have their own requirements on the number of employees required to fall into mid-size group health insurance, however, the mid-sized classification is usually the next level of benefits offered after a company exceeds the 50 employee maximum for small business health insurance. A larger portfolio of plans is available under this classification and some of the plans may have greater benefits than those offered to smaller groups.

The other important distinguishing difference is that mid-size group health insurance for businesses is not guaranteed issue. This means that an insurance company may decline to insure a mid-sized group if there are too many employees with the company that have health issues. To determine this, the insurance company may ask for a claims history report from the previous health insurance company or they may have a health questionnaire that will ask about the number of employees with specific conditions such as cancer, pregnancy, diabetes or other medical conditions with high claims payouts. Individual health questionnaires are not normally required from each employee. The group is reviewed as an entity. A company that has a large proportion of employees with medical conditions or other health concerns may find it difficult to find a mid -market group health insurance company that is willing to assume the risk of insuring the group or they may find coverage at a much higher monthly premium.

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Usually, a company that has reached the mid-market classification will already have a group health insurance plan in effect. A high claims ratio in the previous year may prevent their current insurance company from renewing their coverage at open-enrollment. This usually falls on the anniversary date the policy was originally written. It is during this open-enrollment period that the business may make modifications to their coverage choices and insured members on the group plan may add eligible dependents. During this open-enrollment period the insurance company will also review the claims history of the group for the past year and decide if they want to renew the health insurance policy or charge a higher premium.

LARGE BUSINESSES

Health Insurance Choices for Large Groups

Most insurance companies offer the typical options (HMOs, PPOs, and POSs) to large businesses and their employees. However, these various plans may be revised somewhat in order to better fit the large business’s needs. For one thing, the overall rates offered to such a large number of policy holders will be lower, thanks to the volume of policies being sold. Additionally, because of the wide range of needs and requirements that exist in such a large group of employees, “add-on” benefits to the health insurance plan, such as vision or dental insurance, will usually also be offered at discounted rates in a “package deal.” The main disadvantage large group insurance has when compared to individual or small business insurance is the fact that, with such a huge number of employees to be covered under a single plan, the flexibility of choosing among the different options available can be limited, resulting in a situation where the individual employee must take the one and only insurance plan that is offered, rather than choosing a plan that suits their specific needs.

Benefits and Drawbacks

One of the key differences between large group insurance and small group insurance that it is important to be aware of is that the “guaranteed issue” federal law (the law that states that no small group applicant that can pay for their insurance coverage can be denied a policy offer because of preexisting medical conditions among its employees) does not apply to large businesses seeking an insurance plan. An insurance company is permitted to refuse to offer coverage to a large business if the applicant business has an undesirable claims record in the past. However, unlike small business coverage, once a policy is offered, no specific individual can be investigated or denied coverage of a specific ailment, or in any other way singled out from the large group coverage.

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