Required Employee Participation
for Group health plans
Employers often ask us the
question, “How many of our
employees have to enroll for us
to obtain Small Group health
insurance coverage?” The answer
is very specific to the type of
plan you want to offer, the
health carrier of choice and
packages available, and the
types of existing coverage
options your employees have
currently prior to your benefits
implementation. Here is a list
of scenarios and considerations
you will be facing:
General Rule State of
California
health insurance regulation AB
1672 allows the California
regulated health insurance
carriers to require an Employer
to enroll 75% of eligible full
time w2 employees in the offered
single carrier plan. This is
done to prevent adverse
selection, in the context of
health insurance defined as the
enrollment of just the employees
with chronic medical conditions
resulting in high expense
claims. If the health insurance
carrier has a membership with
just the employees with major
medical conditions and high
expenses it will go out of
business quickly- the premiums
of the healthy employees are
essentially to help cover the
costs of the catastrophic
medical bills of the few. This
75% figure does not include
dependents, just employees.
Alternate Group Health
Insurance If an employee
has alternate group health
insurance coverage either
through another place of
employment or through a spouse
that employee may decline the
health insurance offer and not
count against the participation
pool. This is not the case with
an individual plan. If an
employee has individual and
family insurance coverage or no
coverage at all, he/she will
count against the participation
pool requirement. This is
incentive for the Employer to
increase Employer Contribution
towards employee premium.
Minimum Two, Maximum Fifty The
California state insurance
regulation requires a minimum of
two and a maximum of fifty
employees exist for the company
to qualify for
guaranteed issue health
insurance. This
does not mean you must enroll
two employees! If you can
simply show two eligible
employees, one of the employees
can waive coverage provided they
do so for alternate group health
insurance and can show evidence
of the plan.
Do You Always Need 75%? Do
you always have to be able to
come up with 75% of your
employees enrolling to qualify?
The good news is many of the
California group health
insurance carriers now offer
plan suites where you are
required to come up with a
reduced percentage of the
eligible employee base,
sometimes as low as 60% in the
cases of the
Blue Cross
Benefits or the
Blue Shield Suite Deal
plan packages. These insurance
plan solutions offer specific
plans, not always just reduced
in coverage, with the notion of
getting more folks out there in
California covered.
What if an Employee Declines
Initially? Can He/She Enroll
Later? If an employee
declines coverage in the
initially plan offer enrollment
period the employee cannot elect
to enroll in the plan until open
enrollment upon the plan’s
anniversary month. The only
caveat to this is if the
employee experiences a
‘qualifying event’ such as the
involuntary termination of
alternate group coverage.
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center
