WHAT IS THE DIFFERENCE BETWEEN
SMALL AND LARGE GROUP INSURANCE
"Group coverage" is used loosely
to describe health insurance
plans that are employer
sponsored but there is a
distinction between "Small
Group" and "Large Group" health
benefits which is important.
Your company's options can be
quite different under these two
umbrellas so let's take a look
at the how they differ both in
terms of qualification and
treatment under the law.
What is "Small Group" in terms
of employer-sponsored health
insurance
In the State of California,
Small Group health insurance is
essentially employer-sponsored
health insurance for companies
with 2-50 employees.
Eligibility requirements and
protection is handled under
AB1672.
First, "Guaranteed issue" is a
very big advantage to
establishing a
Group health
insurance plan in California
versus other States.
Regardless of the health of
employees enrolling, the carrier
must offer coverage to an
eligible company. There
are requirements that must be
met by the company but the big
three are 1) 2-50
employees/owners; 2) 75%
of the eligible employees must
go with the plan; and 3) the
employer must pay at least 50%
of the employee's premium (does
not mandate dependents).
For more information on
qualifying for Small Group
coverage, please check our page
of
Small Group enrollment.
The ability of the company to
change rates is also very
important, especially for
companies that have employees
with health issues. In
California, the carriers can up
or down from the standard rate
by 10%. This is called the
RAF (Risk Adjustment Factor).
The size of the group can affect
this rate factor since the
larger the group are more likely
to get a lower RAF. The
theory is that health issues are
spread among a larger pool of
people. It's not atypical
for carriers to offer RAF
guarantees based on the size of
the enrolling group.
Finally, the health carriers in
California designate and file
their Small Group plans with
State agency responsible.
Any eligible group can then
apply for the same plan
regardless of health. This
is important to keep carriers
from "cherry picking" healthy
groups on to certain plan types
and excluding less healthy
groups.
How does Large Group health
insurance differ?
Officially, large group health
insurance is for groups with
more than 50 employees/owners.
Some carriers may allow groups
that were originally designated
as Small Group to remain on the
Small Group suite of plans if
they grow beyond 50 employees
but they are not required to.
There are some very big
differences when comparing Large
Group with Small Group described
above.
Large group plans are not
protected by AB 1672 and are not
"guaranteed issue". The
carrier can decline coverage to
groups based on claims
experience and/or health
history. Rates are built
for that specific group's claims
experience and risk so total
amounts can vary significantly
from group to group. The
plan options are different from
those offered to Small Group and
then to offer many more options.
Some carriers even offer more of
a cafeteria option where
employer's pick specific
benefits to offer (i.e. choice
of office copay, etc).
Some Large group have
tailor-made benefits to meet
their needs and budget.
Large group is quite different
from Small Group and contacting
an experienced agent is more
important than ever when
navigating this side of the
business.
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center