Employer Premium
Contributions and California Group
Insurance
Now that you’ve
decided to offer your Employees
a California Small Group
health insurance plan
you need to figure out how much
coverage you are going to give
and what amount you are going to
pay of the Employees and their
dependents insurance premiums.
It is a difficult issue to
address, as typically relatively
large sums of money are
involved. Since Employee
benefits are of the utmost
importance to the people you
count on to operate your company
you need to step back and make a
careful consideration of the
bottom line vs. keeping crucial
Employees happy. There are a
few different strategies you can
use as an approach such as
straight percentage, defined
contribution, and plan and
percentage option. We’ll
explain to you what each one is
and the advantages and
disadvantages. We are happy to
help you choose the best one for
your specific situation.
Percentage
Requirements
State of California regulation
AB 1672 requires an
Employer offering a regulated
California Small Group health
insurance plan to contribute a
minimum of 50% of Employee
portion premium. For an
Employee’s dependents (spouse &
eligible children deducted on
their tax return) the company
can contribute anywhere between
0% and 100% with no minimum
requirement.
Defined Contribution Most
California health insurance
carriers will allow an Employer
to pay the Employer Contribution
through a defined contribution
dollar amount. For example, you
could choose to offer each
employee $250 towards their
health care. A normal minimum
requirment is set by the
Underwriting Guidelines
of the health carrier but
normally $100 is the bare
minimum amount allowed. This is
convenient for budgeting
purposes and does a great job of
controlling your cost. The
downside is some of your
employees may be older or have
large families enrolling which
leaves them with a much greater
out of pocket cost for health
coverage than your young, single
members. The decision then is
how much are your employees
worth to you.
Plan and Percentage
Becoming more and more popular
nowadays is the ability to pick
a plan you the Employer are
comfortable with budget wise and
choose an acceptable
percentage. You then offer all
or several other plan options
available and alllow your
employees to take the base plan
offered, or upgrade and
downgrade according to the
individual employee medical need
and financial position. This
strategy accomplishes several
things not appearant
immediately. First, it defines
the company budget and doesn’t
leave you exposed to runaway
premium costs. Second, it
allows employees with major
medical conditions within their
family to enroll in a stronger
health plan and pay extra
permiums out of paycheck which
they will be happy to due for
the better coverage. Third, an
employee with no health issues
who doesn’t have a high income
can elect a less expensive plan
than the base option to control
premium expense or eliminate it
entirely.
Choosing the right Employer
Contribution to premiums can be
a tricky proposition, and making
a rash decision can be expensive
and disastrous on morale and
employee productivity. Let us
know your situation by filling
out an inquiry form and we’ll
help you build your premium
contribution model.
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center