What are the minimum Participation and Contribution requirements for employer small group health plans?

Introduction
Premium, Contribution & Participation Minimums

 

All 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,  NO MEDICAL QUESTIONS (See our FAQ) of the owner, employees or dependent and want to make sure that they get the 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 a POP Plan IRC §125.

What are the rules of minimum participation & contribution?

Check the EmployER application, brochures & each carriers manuals   We are happy to help you with that.  Just email us [email protected], get an instant quote and/or schedule a Zoom or Face to Face meeting.

Check out the Option during Special Annual Open Enrollment 11.15 to 12.15 where there are NO Participation rules!

Legal Mandate for Participation & Premium Contribution
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.

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

#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.      Cornel 45 CFR 147.104  Final Rule” (2.27.2013 13416 Federal Register Vol 78 gpo.gov * 

However, 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 *

Just Enter your census or securely send us an excel spreadsheet or a list of employees and get instant proposals for California

employer small group quotes

 

Schedule a Skype, Zoom, Phone or Face to Face meeting

 

#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?

  • Our UHC – United Health Care Administrative Page
    • UHC’s Web Page on Eligibility Verification
      • Our Webpage on Common Ownership –
        • UHC Common Ownership Certification Form
      • Employer Information Form UCH

Questions about your Eligibility Audit?

Please contact Risk Management at:

1-877-504-1179 x 37754
 
 

FAQ’s

“Enforcement – Participation – Recertification – #Actively @ Work”

  • 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?
    • 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. blueshieldca.com/broker_newsletter
    • FAQ from Gallagher
      • 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?
    • 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:
    • 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.
    • Nope, it’s not that simple. See page 13 of the 2019 Group Administrators Handbook. Kaiser’s rules go back to what is required under Health Care Reform- Employee Definition – see above.
    • On the other hand:
      Also in the EOC, under SPD disclosure section:
      The EOC does not explain in detail Group’s eligibility requirements (other than the Health Plan eligibility requirements that appear in the “Premiums, Eligibility, and Enrollment” section).
      The plan administrator must include Group’s eligibility information in the Group’s SPD Summary Plan Description
      Note:
      Health Plan does not impose preexisting condition exclusions or waiting periods, or require that employees be actively at work at the time of enrollment. Therefore, the EOC does not contain a notice of preexisting condition exclusions, waiting periods, or actively-at-work requirements.
    • Google research on definition of actively at work
      The prohibition of actively-at-work clauses is part of the HIPAA nondiscrimination rule’s effort to protect employees from discrimination based on a health factor.one digital.com/correctly-administer-actively-work-clause/
      ***I believe they are talking about the employees health… On the other hand we are all quarantined because of whose health?
      Mayor Garcetti of Los Angeles said Department of Water and Power will shut off services for the businesses that don’t comply with the “safer at home” ordinance. ktla.com/
    • Mayor Garcetti Video update 3.24.2020 & written summary
      Stay at Home Order 3.21.2020 County of LA
      Safer at Home FAQ’s
    • Guidance from Sequoia on changing documents to comply and avoid “actively at work” issues.sequoia.com benefits-continuation-during-a-furlough/
    • Considering the Governor & Insurance Commissioner ordered all insurance companies to pay for Corona Virus testing at no co pay or deductible
      All the Insurance Companies – issuing bulletins on how great they are at getting you testing, coverage and how to protect yourself. See link above for our Corona Virus page.
      Covered CA opened up a Special Enrollment to allow anyone without Insurance to buy it now!
      I just can’t see the group carriers cancelling coverage!

9 comments on “Participation & Premium Contribution Requirements

  1. Is there a way I can allow employees to pay extra if they want a better plan than the one I’m sponsoring and paying the premium on?

  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?

  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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