The group must be able to prove that they are a viable business by providing some basic business documentation. All insurers generally have the same requirements, but occasionally they will relax the qualifying guidelines in an effort to acquire new business. Once a group is deemed qualified, they have hundreds of health insurance plan options from which to choose. It is important to have a knowledgeable broker like Bernardini & Donovan Insurance Services, Inc. at your side to help you determine qualification, and, assist in plan selection that meets your coverage needs and your budget.
The insurance companies generally require that a certain percentage of employees participate in the employer plan. This percentage varies based on group size, and insurance company selected.
Besides regulating who is eligible for small business health insurance, according to your 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.
On March 23, 2014, the Affordable Care Act was signed into law by President Barack Obama. There are many moving parts to this piece of legislation. One of the most important features is the requirement that health insurance plans cover 10 essential benefits. Those benefits are as follows.
A mid-sized employer is defined as an employer with 50 – 99 employees. However, there are four states that do not recognize this classification of the employer. Those states are California, Colorado, New York, and Vermont. These states have small employers defined as 1-100 employees. The insurance companies offer a larger portfolio of plans to groups under this classification, and, some of the plans may have greater benefits than those offered to smaller groups.
A distinguishing factor between mid market employers and small employers is that mid market health insurance plans are 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.
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. The insurance company will have the employer complete a health questionnaire that will ask about specific conditions of their employees, without disclosing any specific employee information, such as cancer, pregnancy, diabetes or other medical conditions with high claims payouts. The employer is to answer this questionnaire to the best of their knowledge. Generally, individual health questionnaires are not required for each employee. The group is reviewed as an entity.
A mid-market employer that has a large proportion of employees with medical conditions or other health concerns may find it difficult to acquire coverage. The insurance companies may either decline to quote the group, or, offer coverage at much higher rates.
A high claims ratio in the previous year may prevent their current insurance company from renewing their coverage at open-enrollment, or, the insurance company may extend a renewal offer, with a very high increase in premium. It is important to have a knowledgeable broker like Bernardini & Donovan Insurance Services, Inc., to assist you with these potential issues.
It is perceived that large employers enjoy lower rates for health insurance because they have more members in their plan. While this is generally true, it is not always the case. 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 mid-market, or small business health insurance plans is the limited amount of plans the employer is allowed to offer their employees. Generally, the insurance company will allow up to four plans to be offered. Small employer-based plans will generally allow their entire portfolio of plans to be available to a qualified employer, even down to a company with just two employees.
One key difference between large group insurance and small group insurance involves the “guaranteed issue” federal law. This 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. These requirements do 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, once a policy is in force, no specific individual can be denied coverage of a specific ailment, or in any other way singled out from the large group coverage.
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