Group Health Insurance is the most crucial part of a benefits package. It is no secret that in our current environment, it has become a challenge for small employers in California to maintain affordable health coverage for their employees due to ever increasing costs and with it now being mandated by "Obamacare", it is the law of the land.
What you’ll discover in this report:
Eligibility Requirements: The Nuts and Bolts!
In order to be considered for group health coverage, a carrier will require that there be a minimum of two employees, there are some exceptions where one eligible employee can still work. The eligible employee is one who works on a full time basis with a normal work week of 30 or more hours for compensation, there is also a provision where that can be modified to 20. Each year an employer may have verify that their group still meets the eligibility requirements for group coverage. A health insurance carrier reviews the application for compliance when a group starts a new plan, and may audit each year at renewal by requesting a certification form that usually requires a California EDD form known as a DE-6 for verification.
The following items are also necessary for compliance:
- At least 51% of the employees must be employed in California
- The only way to waive coverage is through having other coverage elsewhere
- The employer must pay at least 50 % of the premium
- The employer has the right to decide on a waiting period for new employees to enroll in the plan - 0 to 6 months in California
Type of Group Plans Available
- HMO: This managed Care plan gives your employees the security of lower out-of-pocket expenses, comprehensive coverage and virtually no claim forms to fill out. Employees choose a primary care physician who will manage medical care and refer employees to specialists and hospitals within the network. There are two types of HMO's - the "Staff Model" aka Kaiser, and the IPA Model, where an insurance company contracts with Doctor Groups. (such as Blue Shield or Anthem Blue Cross)
- POS: Your employees have the freedom to use the managed care network of physicians or choose doctors and hospitals outside the network. In network, the employees select a primary care physician (PCP) to coordinate their needs and to refer them to in-network specialists. By going out-of-network employees may encounter higher out-of- pocket expense and more paperwork.
- PPO: This preferred provider organization gives the employees the largest selections of network doctors and hospitals. If the employee uses the network, he receives a higher level of coverage; if he chooses out-of-network physicians or hospitals, he pays a higher share of the cost. Various plan designs are available.
- HSA: A Health Savings Account is like a 401K for healthcare. It is a tax advantaged personal savings or investment account that individuals can use to save and pay for their qualified healthcare expenses, now or in the future. Paired with a qualified high deductible plan, the HSA is a powerful tool that empowers consumers to be more actively involved in their health care decisions. Park Family Insurance has the necessary knowledge and expertise to assist both employers and employees who are considering Health Savings Accounts.
- Dental Coverage: May be purchased as a standalone plan or as a rider (an add-on) to a group health plan.
- Vision Coverage: May also be purchase as a rider (an add-on) to group health plans.
Office Visit Co-Payment: Employee payment for office visits (Options from $5-$50 or a percentage)
Deductibles: An amount that may be deducted by the insurance carrier from the total that they will pay toward hospital and other services, in-network and/or out-of-network (Options range from $500-$6500)
Network of Participating Physicians: Doctors who are contracted with the plan
RX Coverage: Coverage for prescribed medications. Many plans include 50 % coverage. Tiered RX plans may be available for Generic/Name Brand/Non-Formulary Drugs (i.e. $10/25/50)
Guaranteed Issue: In California, no one can be declined due to a pre-existing condition. With the Passage of Obamacare, starting in 2014, there is no declination or limitation for pre-existing conditions under any circumstances.
COBRA or Insurance after work:
COBRA (Consolidate Omnibus Budget Reconciliation Act of 1985) requires businesses to extend their group health insurance coverage to an employee who leaves or is terminated for reasons other than cause. The employee must pay the premium to the employer, who in turn includes it with his monthly payment to the company - however, this is commonly handled by a third party administrator.
In California, companies with two to nineteen employees must continue to provide coverage for twelve months after termination. The coverage must also be offered to the employee’s spouse and child. All potential beneficiaries must apply for continued coverage within 30 days of termination. Fortunately, per state law, the offer and paperwork is done automatically by the insurance carrier on the employer's behalf.
Additional considerations for the employer:
An employer must offer coverage to all eligible employees. Where the employer pays 100%, all employees must enroll unless they sign a waiver that they have other coverage. In plans where employees are asked to contribute, employees may waive coverage if they have other coverage or cannot afford coverage. However, if more than 30% of the group declines coverage without other health insurance elsewhere, it will make the entire group ineligible as the group is not in compliance. It is unclear if the Obamacare mandate changes this.
Today, more than ever before, employers need to understand the requirements in offering a group plan. Health insurance is becoming more complicated every day. At Park Family Insurance, we are committed to educating employers and helping you to streamline your plans during these difficult economic times.