Small Group Plans (2-50 employees)
Guaranteed Issue Requirements
By law, California group health insurance is Guaranteed Issue (regardless of health) under certain guidelines. This means insurers cannot decline coverage for 2-50 employee sized companies when they fulfill these requirements. Rates are unisex and cannot vary more than 10% higher or lower (also called the RAF or Risk Adjustment Factor) from the carrier published standard (1.0 RAF) rate for that specific plan. There are several main requirements:
- The company must show that at least two "employees" were formally tied to the company for half of the prior calendar quarter. Proof must be provided in the form of the Quarterly Wage Report (DE-9c) and/or the company's Articles of Incorporation and Statement of Information or comparable corporate documentation.
- Out of State Corporations. Companies that incorporate in other states need a Certificate of Qualification within California which essentially allows them to do business here. The carrier will base the effective date of coverage on when the Certificate of Qualification is filed, not the original incorporation date.
- LLC's. The carrier bases the effective date on the state-stamped date of the LLC as long as it lists the Managers (need at least two enrolling).
- At least 75% of eligible employees must enroll.
- Over 50% of eligible employees must reside in California. Only a few carriers will consider covering a group with more than 50% of employees residing outside California.
- The company must pay at least 50% of the "employee" premium.
California Group Plans: Pre-Existing Conditions
Group plans in California cannot refuse to cover you or decide to charge you more if you have a pre-existing condition as long as you turn in your application into the carrier within 30 days of becoming eligible.
HMO Plans do not exclude pre-existing conditions at all. A PPO group plan can make you wait before it will cover care for a pre-existing condition. The longest you will have to wait is six months.
- There is no waiting period if you have not had treatment or symptoms for the condition in the past six months.
- There is no waiting period if you have had "creditable" health coverage for at least six months and it has not been more than a 62 day gap between the prior and new group coverage..
- You will wait less than six months if you had other health coverage for less than six months and it has not been more than 62 days since your last insurance ended.
Participation RequirementsAt least 75% of the eligible employees must enroll. Some quick notes on the definition of "eligible".
- 1099's: 1099 or contract employees are not considered eligible for California group health insurance except with selected carriers
- Part Time: Employees working less than 30 hours weekly can be included or not depending on the group's choice. If the company chooses to cover part timers (down to 20 hrs/wk), they then figure into the 75% calculation
- On other Group Plan. Employees on another qualified group health plan are not included in the 75% calculation. They will still need to decline coverage via an employee application, but they will not affect the participation as shown in the example below.
|total employees working 30+ hours per week|
|employees have worked less than the 90 day waiting period (not eligible yet)|
|employees waive coverage because they are covered under their spouse's group policy|
|Employees eligible to enroll|
|75% must enroll (round up fractions)|
|Employees who are not required to enroll.|
Employer Contribution Requirement
Most insurers require the employer to contribute at least 50% of the "employee" premium, with no contribution requirement for dependent premium. Anthem Blue Cross has one package of plans that require only 25% of the employee cost. Since rates differ by employee age and home zip code, an employer who contributes a percentage will contribute more toward older employees and less for younger employees. When employees have birthdays that place them into a higher rate band (i.e. age 40), the employer will then pay the agreed percentage on the increased rate.
Some carriers allow a minimum $100/month/employee fixed dollar contribution. The defined dollar contribution approach helps the employer to budget heatlh care costs as their costs are fixed regardless of employee age or increases renewal. Since rates are different by age, the older employee (who may need health care more than the younger empoyee) would contribute a higher amount, and the younger employee (who may not have much discretionary income) would contribute less.
An employer may also offer employees the choice of several different health plans to choose from where the employer contributes a fixed percentage of one given plan. This amount is then applied to the cost of the other plans, and the pmloyee contributes the difference.
Employer Application (download)
Employee Application (download) for each employee and/or owner
Sole Proprietor-Owner Statement (download)
Most recent DE9c (State quarterly payroll report)
Statement of Information (sample)
Copy of Articles of Incorporation
Business check for one month's estimated premium payable to the insurance company
Send to our office:
Health Plans Online, Inc.
31194 La Baya Dr. Ste. 201
Westlake Village, CA 91362
When to submit all forms:
It is ideal to submit all completed forms two weeks before the requested effective date to provide ample time for the carrier to underwrite and provide a group number.
Common Enrollment Form Issues
- Employer Application.
- Incomplete items.
- Officer/Owner signature missing.
- Employee Application.
-Missing signatures and/or initials.
-HMO Primary Care Doctor and/or dentist code not entered.
-Choice of Medical and/or Dental plan not listed.
-Dependent information not complete (height/weight/disabled, etc).
-Medical history information not complete (missing dates, results, etc)
- Quarterly Wage Report - DE9c
-Part time employees with high salary need to be addressed
-Terminated employees need to noted (can write "Term" next to name on DE9c)
-Company name/address different.
-Employees not listed on payroll (example new employees...need to submit
separate payroll report).
- Corporate Paperwork
-Articles are out of State. No stamped date by State of California, or too recent.
-Statement of Information not stamped by State of California.
-Officers listed on Statement but not enrolling in plan. (could be eligible waivers)
-Company name and/or address is different. Need to address.
-LLC Formation document does not list Managers.
- Company Check
-Different address/company name.
-Submitted amount not correct (or within 10% of correct amount depending on the carrier)