What are the Participation and Contribution requirements?

Premium & Contribution Minimums

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.

#Special Annual Open Enrollment

There is an Special Open Enrollment Period from November 15th  to December 15th  every year where a Small Group can enroll without meeting participation or contribution requirements“Final Rule” (2.27.2013 13416 Federal Register Vol 78 gpo.gov * 

The  Prohibition of  Management Carve Outs – Section 2716 Health Care Reform – while not presently enforced, requires that you must treat all employees the same,  and must still offer insurance to all employees…  I don’t think this provision is that big a deal, as at renewal, you MUST meet the participation & contribution rules!

Although carriers must lower their contribution requirements, the Affordable Care Act still mandates that Applicable Large Employers (ALEs) with 50 or more full-time plus full-time equivalent employees must offer affordable coverage that meets minimum value in order to avoid a §4980H(b) employer penalty.

California requires Individuals and Families to have coverage or face a tax penalty, just like the Federal Law did.  
Email us for more informatio

(B) In the case of a group health plan in the small group market that cannot comply with employer contribution or group participation rules for the offering of health insurance coverage, as allowed under applicable State law, and in the case of a QHP offered in the SHOP, as permitted by § 156.285(e) or § 156.286(e) of this subchapter, a health insurance issuer may restrict the availability of coverage to an annual enrollment period that begins November 15 and extends through December 15 of each calendar year. Cornel 45 CFR 147.104 * 

Health insurance carriers are not required to renew existing small group clients who do not meet minimum participation requirements, but only to take new ones.  However, carriers generally will renew existing plans because otherwise they would just be circulating these clients from carrier to carrier.  Levitt.com * 

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Enter your census and we will get right back to you with quotes

 

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#Recertification 

Annual Proof that you’re in compliance with

participation rules

 

Insurance Companies may enforce their participation rules  and the new Health Reform definition of small employer needing at least one bonifide non spousal employee when you 1st apply.   

On the other hand, there is a Special Enrollment from November 15th to December 15th, when an employer can enroll without having to meet participation or contribution requirements.   One would have to check with each company to see if they would do an audit at renewal.

Here’s some information on what Renewal enforcement might consist of:

Renewal questionnaires are sporadic with most companies, with Cal Choice almost always requiring recertification.
For more details check the Administration page for the Insurance Company you are with.

UHC United Health Care
Participation Audit

Do you have a high enough percentage of employees covered?

Are you a bonified business?

Questions about your Eligibility Audit?

Please contact Risk Management at:

1-877-504-1179 x 37754
 
 

Resources

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

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.

Similarly Situated Individuals

FAQ

 

14 comments on “Enforcement – Participation – Recertification – #Actively @ Work”


  1. Hi Steve –
    I may have to lay off some of my employees or cut their hours – including mine, because of the COVID 19 & Quarantine.
    If I cut my hours or have no hours altogether, and continue paying the Kaiser medical insurance, am I or any of my laid off employees still covered as long as continue to pay the insurance?
    Kind Regards,
    Ruth
    • The first thing to check and ask, is how many hours?
      Under Health Care Reform 30 hours is full time.20 hours for part time.
      I need to double check. Since you are with Kaiser, it appears that they automatically include Part Time 20 hours and don’t ask you to make a choice on their application. If so, any employees still working 20 hours don’t have an issue.
      I will email you privately the last Kaiser Employer Application we have for you.
       
    • We’ve only received a bulletin on this issue so far from Blue Shield.
      We will post any further guidance here. See also our page on how Insurance Companies are handling claims & testing for Corona Virus.
      Eligibility and billing questions
      Question:
      Will Blue Shield of California continue to enforce active at-work provisions for fully insured employer groups that have reduced their workforce or workforce hours?
      Answer:
      The terms of our group service agreements continue to apply to employee eligibility for coverage. Please refer to the agreement and note that there are provisions in most group service agreements that may allow for continued coverage for members who are impacted by a temporary suspension of work or temporary reduction of hours in certain circumstances, such as a layoff, furlough, or approved leave of absence. This may be permitted under the employer’s policies regarding coverage, under the following conditions:

       

       

      If the subscriber ceases active work because of a disability due to illness or bodily injury, or because of an approved leave of absence or temporary layoff, payment of dues for that subscriber shall continue coverage in force in accordance with the employer’s policy regarding such coverage.
      If the employer is subject to the California Family Rights Act of 1991 and/or the federal Family and Medical Leave Act of 1993, and the approved leave of absence is for family leave pursuant to such Acts, payment of dues for that subscriber shall keep coverage in force for the duration(s) prescribed by the Acts. The employer is solely responsible for notifying employees of the availability and duration of family leaves.

      Please also note that employees who lose eligibility for coverage due to a reduction of hours or suspension of work may have the right to continue coverage under COBRA or Cal-COBRA. Please refer to your group service agreement for additional information.
      Question:
      For groups in industries affected by COVID-19 closures, will Blue Shield of California provide a grace period other than the usual 30 days for premium billing?
      Answer:
      We are evaluating every decision or request from the State and Federal Government and our senior sales leaders are meeting daily to make proposals and decide on next steps.
      For now, we’re referring all clients back to their existing contracts and highlighting provisions [see our page on how to read an EOC Evidence of Coverage] that help in a time like this. https://mrktoa.blueshieldca.com/200323_broker_newsletter_t4.html#article5

       
      • FAQ from Gallagher

         

        24. If we use a measurement/stability period safe harbor, which hours do we have to count when calculating the number of hours worked in the measurement period?
        For hourly employees, you must calculate actual hours of service and hours for which payment is made or due for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.
        For non-hourly employees, you are permitted to calculate the number of hours of service using one of three methods. You may apply different methods for different classifications of non-hourly employees, so long as the classifications are reasonable and consistently applied.
        The three methods are:

        1. Counting actual hours of service (as in the case of hourly employees) and hours for which payment is made or due for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence; or
        2. Using a days-worked equivalency method whereby the employee is credited with eight hours of service for each day the employee is credited with at least one hour of service (including hours of service for which no services were performed); or
        3. Using a weeks-worked equivalency of 40 hours of service per week for each week the employee is credited with at least one hour of service (including hours of service for which no services were performed).

        However, you cannot use the days-worked or weeks-worked equivalency method if the result would be to substantially understate an employee’s hours of service (e.g. employees working three 10-hour days).

      • Excerpt of Bulletin from CA Department of Insurance
        What if I cannot pay my insurance premiums?
        The Department of Insurance is Requesting a 60-day grace period to pay insurance premiums
        Consumers should contact their insurance company if they need additional time to pay their premium.
        http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/release030-2020.cfm
        http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/upload/nr030-BillingGracePeriodNotice03182020.pdf
        http://www.insurance.ca.gov/01-consumers/140-catastrophes/Coronavirus.cfm
      • Here’s, hot off the press!
        Q:Can an employee who loses eligibility (e.g. hours reduced, furloughed employee, etc.) retain eligibility if I (the employer) still pays employer contributions?
        A: For large and small groups:
        • As long as the group and employee are current on their monthly payments, Kaiser Permanente will allow employees that would otherwise have lost eligibility to remain on the plan.
        • Kaiser Permanente reserves the right to change this policy at any time.
    • In reviewing your Kaiser EOC Evidence of Coverage – it’s up to the employer to make the rules for who is eligible!
      Group eligibility requirements
      You must meet your Group’s eligibility requirements, such as the minimum number of hours that employees must work. Your Group is required to inform Subscribers of its eligibility requirements.

10 comments on “Participation & Contribution Requirements

  1. 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
      Contribution level
      Plans desired
      plans desired

  2. 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?

    • 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

  3. 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?

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