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Paying for Individual health
plans
Many employers in California do
not realize that paying for
employee's individual health
insurance policies presents many
problems. There can be
liability for the employer in
doing so. Let's look at
the implications and understand
why providing
Small Group health
insurance to your California
employees is important.
First, we need to understand the
differences between Small Group
health or employer
sponsored health insurance and
individual/family or private
insurance. Small Group is
quite different in a few key
ways. First, it is
governed by
California law AB
1672. Among many
provisions set forth in AB 1672,
Small Group coverage is
guaranteed issue to qualified
small companies with 2-50
employees. This means that
a person with a legitimate
employer-employee relationship
(can be full or part-time depending on group preference)
cannot be declined due to
health.
Individual/Family health
insurance is quite different in
this respect. Individuals
must qualify based on health in
a process called medical
underwriting. They can be
declined coverage have rates
increased based on their health
history or status. This
difference in medical
qualification is a big issue for
small groups that pay for
individual health insurance
plans for their employees if the
group is eligible or capable of
providing group health. If
an employee is declined coverage
and/or suffers a major medical
bill, he/she can go after the
employer saying that the
employer should have sponsored a
qualified (guaranteed issue)
group health plan. This
assumes that the employer met
the requirements under AB 1672
to offer such a plan.
Employers usually offer
individual plans based on cost
but the difference hardly
justifies this exposure to
liability. In California,
the employer can pay as little
as 50% of the employees health
insurance premium and with
options such as
Employee Elect
through Anthem Blue Cross, an
employer can now offer a full
range of plans to each employee
with a fixed contribution
(dollar amount or a percentage
of a given plan).
The other main issue deals with
the tax treatment of employers
paying for employee's individual
health plans. Officially,
only a qualified group plan
premium for employees can be
deducted as a business expense.
Paying for individual health
plans generally cannot be
deducted. Make sure to run
your company's situation by a
tax professional but this is a
major drawback for paying for
individual health plans.
In summary, with all the
options, both from a plan and
cost perspective, on the market,
small group health insurance
makes the most sense. Run
your instant quote and please
let us know how we can help
investigate your Small Group
health insurance options.
Other
important
resources:
California
Small Group
health quote
California
Group
Enrollment
and
Eligibility
Center
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