Company Size, Enrollment,
and Pricing
Questions often arise in the
California
group health insurance
acquisition process concerning
size of the company and
available benefits for small
businesses and the affect the
size of a company may have on
the premiums and the products
available.
Companies 2-5
employees The
minimum size required in
California to qualify small for
Small Business coverage is to
show 2 eligible employees
minimum. Both eligible
employees do not usually have to
enroll in the plan if one is
able to waive the plan offer due
to alternate group coverage
through spouse or employment.
Companies with size 2-5 employee
will see rates assigned
typically at the highest
allowable rate adjustment factor
of 1.1 which includes the 10%
additional cost above standard
rate book price. You can review
our guide on
rate adjustment factor R.A.F
here. This isn’t always
an automatic health premium
assignment. Some carriers will
allow detailed health statements
to be completed and offer
discounting off the maximum
number.
Companies 6-10
employees Once the
6-10 employee size is attained
the California health insurance
plans begin to offer
discounting. Options also open
up frequently for multiple plan
options and combinations for
employees to choose personal
plan of choice. Note: over the
last few years these options
have become more and more
prevalent at the 2-5 company
size as well. Another impact of
reaching the ten employee
threshold is the option of a
company enrolling as a carve out
can be available. Carve out
enrollments, as we discussed in
our alternate section is the
practice of splitting out a
class or population within a
company to offer a specific
group of employees coverage,
excluding the rest. Each
employee is likely to be
required to complete an employee
health questionnaire, sometimes
called an employee health
statement, which asks the
employees to disclose personal
health information regarding
employee and dependent health
history, treatment, and current
condition. This information is
used to assign pricing.
Companies 10-49 employees
At the 10-25 employee size range
rate adjustment factor
assignments can be guaranteed.
Promotional pricing with
stipulations on prior health,
enrollment size, and current
R.A.F levels can qualify a
business for guaranteed pricing
offers. Individual health
statements are often not
mandatory at this level, so
underwriting becomes simplified
for the consumer. To receive
better pricing a group often
will, however, complete employee
health questionnaires. With
many California carriers this is
handled on an Employer level
health questionnaire as opposed
to the Employee level. Best
pricing rate adjustment factor
number is now the best allowable
.90 or minus 10% off standard
premium price.
Split Carrier Options
The health insurance
carrier will commonly allow a
‘split carrier’ option usually
with the stipulation the
majority of the employees enroll
with the host carrier. Most
carriers have a requirement to
split employee enrollment with
another health insurance carrier
to maintain both a minimum
employee enrollment amount and a
percentage level. For example,
one major health insurance
carrier requires a minimum of 5
people enrolled and 75% employee
participation whichever is
greater. The one California
health insurance carrier which
is most frequently split with is
Kaiser Permanente, as they will
accept down to one employee
enrolled on their side with no
percentage rule.
Composite Rates
Beyond the 50 Employee level the
market commonly switches to
composite rates, which means
instead of age banded pricing a
company will receive cost
figures based strictly on
employee family type. This
means that each single employee
enrollment receives the same
price regardless if they are 25
or 75 years old. This can be an
advantage or disadvantage to the
particular employee. The 25
year old employee, for example,
may receive higher pricing
versus an age banded rate
schedule if they are enrolled
with a company with 90% of their
employee base averaging ages
over 50. Conversely, the 60
year old employee may receive a
better price using composite
pricing if the composite price
is based on company population
which averages in the 20’s and
30’s.
Other
important
resources:
California
Small Group
health quote
California
Group
Enrollment
and
Eligibility
Center
