What are the Participation and Contribution requirements?
The Insurance Companies have participation & premium contribution rules as they are REQUIRED to write your company under Health Care Reform (AB 1083 ♦ §10753 et seq. Non Grandfathered Plans) regardless of the health status of the owner, employees or dependent and want to make sure that they get young & healthy employees along with those more prone to claims.
The Principles of Insurance require a large group of people so that there is enough money to pay claims and meet the 80% loss ratio rule, thus spreading the risk and avoiding “adverse selection.”
If an employer is not covering the employees… the health plan might not qualify as tax deductible business expense under IRS Code Section §106. The employer may require the employee to pay part of the premium, which can be deductible under IRC §125.
What are the rules of minimum participation & contribution?
EmployER application, brochures & each carriers manuals
Check out the Option during Annual Open Enrollment 11.15 to 12.15 where there are NO Participation rules!
Insurance Code §10753.06. (Health Reform – Non Grandfathered Plans)
Every carrier shall file with the commissioner the reasonable participation requirements and employer contribution requirements that are to be included in its health benefit plans. Participation requirements shall be applied uniformly among all small employer groups, except that a carrier may vary application of minimum employer participation requirements by the size of the small employer group and whether the employer contributes 100 percent of the eligible employee’s premium. Employer contribution requirements shall not vary by employer size.
A carrier shall not establish a participation requirement that
(1) requires a person who meets the definition of a dependent in subdivision (e) of Section 10753 to enroll as a dependent if he or she is otherwise eligible for coverage and wishes to enroll as an eligible employee and
(2) allows a carrier to reject an otherwise eligible small employer because of the number of persons that waive coverage due to coverage through another employer.
[some carriers will reject if the person waiving is the ONLY common law employee – call or email for your situation]
[Health Reform §2708 42 US §300gg requires that Employees be eligible within 90 60 days. DOL Guidance 2012-02 national underwriter.com Health Reform Facts Q & A 249 (email us for a copy) Learn More⇒ Our Page on waiting periods]
Definition – Minimum Essential Coverage 5000A (f)
Please note that while the law mentions that an employee that is covered under another group plan (spousal) doesn’t count towards the participation level, the practice has been, to include Medicare, VA – Veteran’s, for many companies, EVEN individual plans and Medi-Cal etc.
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Some Insurance companies might consider the non union employees as guaranteed issue, if the employer is mandated under a collective bargaining agreement to contribute to Union Labor Fund. Blue Shield Quick Underwriting Guideline Page 5
Extra 6 week or more waiting period for Part Timers SB 1790 – Insurance Code §10700 f 1 d
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Related Pages in Participation & Contribution Requirements Section
If an employee opts out, the employER may not reimburse him for it. and it’s a $100/day fine!
Health Reform §2708 42 US §300gg requires that Employees be eligible within 90 days. DOL Guidance 2012-02 Learn More⇒ Our Waiting Period Page
Check out the rules on Plan Anniversary, late enrollee and Open Enrollment in the Administrative Guide for the Insurance Company that you select. This is another way that adverse selection is avoided, one must be on the plan for the entire year, not just when you are ready to turn in a claim.
How do I comply with the rule about offering the same program to all employees, when I have some who want a better plan? Don’t I have to offer and pay for the exact same plan for everyone?
You don’t have to have the same plan for everyone. You just have to treat them the same.
So, you could say pick a Silver HMO as the base plan and say pay 99% or 75% of that premium. If employees want to upgrade, they can pay the difference. When we do quotes for you, we can send a worksheet for each employee to pick and choose and his contribution.
In addition to the Section 106 deduction for employer contributions… The employee contribution can be tax deductible if you enroll in a Section 125 POP plan.
Here’s where you would put that on this Blue Cross Employer Application, just as an example.
Contribution Level
Plans desired
Can an employer when it’s NOT open enrollment change the contribution % (or amount) that the company is willing to cover…?
Is there a required 30 days notice period?
Or can the do what ever they like when it comes to that?
If the contribution changes, you would have a special enrollment period to get an individual plan. Loss of Current Coverage
What Insurance Company do you have?
What does your employee manual say?
How many employees are there?
Why are you harassing me about participation requirements? Nolo says I don’t have to cover my employees, as long as I don’t do it on a protected class, like sex, race, religion or something.
https://www.nolo.com/legal-encyclopedia/can-employers-offer-health-insurance-only-to-certain-employees.html
Please read the introduction to this page 3 times as suggested by Justice Frankfurter.
The Insurance Companies under AB 1672 and then ACA/Obamacare are mandated to write groups regardless of health. Would you rather write just the owners, but go back to pre 1992 and have medical questions?
So, please, would you get a quote and a census including ALL employees under ALL common ownership companies IRS 414 and then we can shop around, check the underwriting rules and see what we can do for you.
We can’t discuss every possible scenario and possibility. We need the facts and deal with just that.
Examples of Medical Underwriting Pre AB 1672 1992 CA – ACA/Obamacare Federal
Examples of Declinable Conditions In the Medically Underwritten Individual Market, Before the Affordable Care Act
Condition Condition
AIDS/HIV Lupus
Alcohol abuse/ Drug abuse with recent treatment Mental disorders (severe, e.g. bipolar, eating disorder)
Alzheimer’s/dementia Multiple sclerosis
Arthritis (rheumatoid), fibromyalgia, other inflammatory joint disease Muscular dystrophy
Cancer within some period of time (e.g. 10 years, often other than basal skin cancer) Obesity, severe
Cerebral palsy Organ transplant
Congestive heart failure Paraplegia
Coronary artery/heart disease, bypass surgery Paralysis
Crohn’s disease/ ulcerative colitis Parkinson’s disease
Chronic obstructive pulmonary disease (COPD)/emphysema Pending surgery or hospitalization
Diabetes mellitus Pneumocystic pneumonia
Epilepsy Pregnancy or expectant parent
Hemophilia Sleep apnea
Hepatitis (Hep C) Stroke
Kidney disease, renal failure Transsexualism
Declinable Medications
Anti-Arthritic Medications
Adalimumab/Humira
Cyclosporine/Sandimmune
Methotrexate/Trexall
Ustekinumab/Stelara
others
Anti-Diabetic Medications
Avandia/Rosiglitazone
Glucagon
Humalog/Insulin products
Metformin HCL
others
Medications for HIV/AIDS or Hepatitis
Abacavir/Ziagen
Efavirenz/Atripla
Interferon
Lamivudine/Epivir
Ribavirin
Zidovudine/Retrovir
others
Anti-Cancer Medications
Anastrozole/Arimidex
Nolvadex/Tamoxifen
Femara
others
Anti-Psychotics, Autism, Other Central Nervous System Medications
Abilify/Ariprazole
Aricept/Donepezil
Clozapine/Clozaril
Haldol/Haldoperidol
Lithium
Requip/Ropinerole
Risperdal/Risperidone
Zyprexa
others
Anti-Coagulant/Anti-Thrombotic Medications
Clopidogrel/Plavix
Coumadin/Warfarin
Heparin
others
Miscellaneous Medications
Anginine (angina)
Clomid (fertility)
Epoetin/Epogen (anemia)
Genotropin (growth hormone)
Remicade (arthritis, ulcerative colitis)
Xyrem (narcolepsy)
others
How do we send the insurance company the portion the employer pays and the portion the employee pays? Do we have all the employees write out a check too? Is there a way the employee’s contribution can be tax deductible?
The employee premium can be tax deductible by setting up a Section 125 POP Premium Only Plan.
Note also, that when we do quotes and proposals for you, when requested, we can calculate the employee contribution and an authorization for payroll deduction is on that form
Here’s how to set up payroll deduction for:
Quick Books
Accounting Coach.com
Simply Insured.com
ADP – You’d think they would explain payroll deduction better, but they are competitors and not just doing payroll