California Eligible Employee Definition for Small Group Health Insurance

Who counts as an eligible employee for a California small group health plan?

If you are trying to set up a California small employer group health plan, one of the first questions is whether you have at least one eligible employee. This matters because a sole proprietor, owner-only business, or husband-and-wife-only business usually does not qualify as a small employer group by itself.

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Quick Answer

For California small group health insurance, an eligible employee is generally a permanent employee who is actively working full-time, usually averaging at least 30 hours per week. Some employees working 20 to 29 hours per week may also be eligible if the employer offers coverage consistently to similarly situated employees and the employee meets the required work history rules.

Common Questions About Eligible Employees

Can a business owner get a group plan with no employees?

Usually, no. A sole proprietor, partner, or corporate owner may be included in a small group plan, but the business generally still needs at least one eligible non-spouse employee to qualify as a small employer group.

If you do not have an eligible employee, you may need an individual or family health insurance plan instead.

Does a spouse count as the required employee?

Usually, no. A husband-and-wife-only business normally does not create a qualifying employer group. The carrier may ask for proof that there is a real, bona fide employer-employee relationship with a non-spouse employee.

See also: Bona Fide Employer-Employee Relationship.

Can a 1099 independent contractor be covered as an employee?

Generally, a 1099 contractor is not treated as an eligible employee for small group health insurance. If the worker is really functioning as an employee, the employer may need to review payroll, tax, labor, and insurance rules.

See also: 1099 Independent Contractor vs. Employee.

What about employees working 20 to 29 hours per week?

California rules may allow employees working at least 20 but fewer than 30 hours per week to be treated as eligible employees if the employer offers coverage to that class of employees consistently and the employee meets the required work pattern. The insurance company may ask for payroll records or wage filings to verify eligibility.

What proof might the insurance company ask for?

Carriers may ask for documents showing that the business is active and that the employee is a real employee. This may include payroll records, DE-9, DE-9C, W-2s, wage reports, tax filings, or other proof.

See also: Documents to Show a Bona Fide Employer Is in Business.

Related California Small Group Pages

• Employer Definition for Small Group Health Insurance
• 1099 Independent Contractor vs. Employee
• Participation and Employer Contribution Requirements
• 90-Day Maximum Waiting Period
• Late Enrollee and Special Enrollment Rules
• Dependent Definition — Children up to Age 26

Not Sure Whether Your Group Qualifies?

You do not have to figure out all the rules before contacting us. If you are in California and want to know whether your employee, spouse, partner, officer, or worker can qualify for a small group health plan, email the details and we can help you review the situation.

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Steve Shorr Insurance has helped California individuals, families, and small employers with health insurance questions for decades. You can learn more here:

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