Out of State Companies and
California health insurance
Let's take a look at how
California group health works
with out of State companies
The first issue that arises is that a company must either be a California company or have a Ceritficate of Qualification (for corporations) to do business in California in order to have a group health plan through a California carrier. Some companies will incorporate in other States such as Nevada to reduce State income tax. This can pose problems down the road if the company wants to establish a group health plan for California residents. The Certificate of Creditable coverage typically costs as much as actually incorporating in the State.
In other situations, a company
legitimately exists out of
California but has California
employees. The carriers
all have have different
underwriting requirements with some carriers
requiring that a majority of
total employees (not just
eligible employees) must be
California residents. Some
other carriers require lower
percentages such as 25%.
The other issues with having
employees out of California deal
with costs and networks.
Some carriers apply very high
premiums for employees outside
their preferred States or
networks. This can
significantly raise the rates
depending on the States and
employee census information.
The network situation can also
be important. Blue Cross
and Blue Shield have the closest
thing to a true nationwide PPO
network with the Blue Card
program. If you a company
splits multiple States for
employee residency, the Blues
are a good place to start due
since Blue Cross Blue Shield is
typically the largest if not
only network and carrier in the
State.
One issue is when a company
starts with a majority of the
required percentage of employees
located in California but that
ratio changes as the company
grows. At anniversary
date, the carrier can review
eligibility and this may be an
issue again.
Documentation requirements for Group enrollment
When enrolling for group health
insurance, various forms are
needed by the carrier. One
of them is the payroll and wage
report to the State. In
California, this is called the
DE6 and is submitted quarterly.
It has different names in other
States. If you split
multiple States, you will need
to submit the payroll reports
for all States. In
California, there is a form for
Corporations called the
Statement of Information.
The carrier requests this to
establish eligible
owners/officers to make sure the
company enrolls 75% of eligible
people. Some States do not
have this form and the list of
officers may be listed in
another document (such as the
Articles).
Having a company in another
State does not preclude you from
enrolling in California group
health insurance for your
employees but it does make it a
bit more involved. Please
let us know about your
situation and we will help to
provide guidance and work for a
smooth transition.
