What springs to mind when you hear the words, “group health insurance”?
Don’t feel bad if you don’t know. You’ll be surprised how many people are not 100% sure what this means.
Whether you’re an employee or an employer, learning about different types of coverage is always wise.
Your employer (whether a small or big company) may offer this type of insurance to his employees.
According to the National Association of Health Underwriters (NAHU), group health insurance coverage is a policy that is purchased by an employer and is offered to eligible employees of the company (and often to the employees’ family members) as a benefit of working for that company. A group health insurance plan is a key component of many employee benefits packages that employers provide for employees. The majority of Americans have group health insurance coverage through their employer or the employer of a family member. One of the advantages for employees in a group health plan is the contribution most employers make toward the cost of the health coverage premium – in many cases, employers pay one-half or more of the monthly premium for an employee. Another advantage is that most employers have established Premium Only Plans (often called POP plans) that allow employees to pay any employee-required contributions to premiums on a pre-tax basis. Between the employer contributions, which aren’t taxable for employees, and the POP plan, employer-provided health insurance is significantly subsidized due to these tax breaks.
Your company will probably be eligible for a small business plan if it meets the following criteria:
- Your company consists of at least two full-time owners, officers, partners, and/or employees, as verified by officially filed state quarterly wage and tax statements (e.g., NYS-45 in New York and DE-6 in California) or annual federal tax return documents.
- Your company is a legitimate business entity (i.e., your company was formed for a purpose other than to obtain insurance), as verified by one of the following documents:
- A business license or fictitious name filing (for proprietorships and partnerships)
- Articles of incorporation (for corporations)
- Articles of organization (for limited liability companies)
- Your company meets the minimum employer contribution percentage set by the insurance company.
Please note that eligibility criteria may vary among insurance companies and by state.
Is Your Business Eligible for Group Coverage?
Under federal law, small employers are guaranteed group coverage should they choose to purchase it, regardless of the employees’ health status. A “small employer” is defined as a business with 2 to 50 full-time employees. Owners are generally counted as employees, so sole proprietorships with one employee usually fall into this category, as do partnerships without any employees (by definition partnerships have two or more partners). Some states define the self-employed as “groups of one” and require insurers to guarantee issue them coverage in the small group market.
Who Is Eligible for Coverage?
The general rule is that if an employer offers group health coverage to any full-time employees, the employer must offer coverage to all full-time employees.
The employer has the option to offer coverage to part-time employees (defined as those working fewer than 30 hours per week). If the employer offers coverage to any part-time employees, all of them must be offered coverage.
These rules apply regardless of the medical condition of the employees. In other words, any eligible employee can’t be denied coverage based on previous medical problems, known as preexisting conditions.
In addition, any dependents of eligible employees are generally eligible for coverage under a group plan. Dependents include spouses, children, and in some cases, unmarried domestic partners. Dependents cannot enroll for coverage unless the employee has enrolled.
Contact us today to learn more about your options on premium costs.