What are the minimum Participation and Contribution requirements for employer small group health plans?
Small Group Participation & Contribution Requirements
What insurance companies require before approving a small group health plan
1. Minimum Employer Contribution
Most insurance companies require the employer to contribute:
- At least 50% of the employee-only premium, OR
- At least $100 per employee per month
- EmployER Definition – Health Care Reform
2. Minimum Employee Participation
Insurance companies require a minimum percentage of eligible employees to enroll:
- 1–4 employees: 70% must enroll
- 5–100 employees: 25% must enroll
Example: If you have 1 eligible employee, that 1 person must enroll (100%).
3. Who Counts as an Eligible Employee?
- W-2 employees working required hours (usually 20–30+ hours/week)
- Owners (for-profit businesses only)
- Owners may enroll after the business qualifies as a small employer. However, owners and their spouses generally cannot be the common-law employee needed to establish the group. A husband-and-wife-owned S corporation with no other bona fide W-2 employee generally does not qualify for California small-group medical coverage.
- Dependent Definition – Up to Age 26 – Add newborn baby
Not eligible:
- 1099 contractors
- Volunteers
- Board members (unless paid as W-2 employees)
4. Special Rules for Nonprofits
If your organization is a nonprofit (501(c)(3)), the rules are slightly different:
- There is no ownership — nonprofits do not have owners or partners
- Governance is through a board of directors
- Board members are usually not eligible unless they receive W-2 wages
- You must have at least one true W-2 employee to qualify
Required documentation may include:
- IRS Form 990 (proof of nonprofit status)
- Payroll report (DE-9C or similar)
- Employee application
5. California Eligibility Rules
- At least 51% of eligible employees must reside in California
- Virtual or remote businesses are acceptable
- Mailing and physical addresses may differ
6. What Insurance Companies Verify
- Payroll records (W-2 employees)
- Tax filings (990, 1120, etc.)
- Employee eligibility status (enrolling or waiving)
- Employer contribution amount
- Proof of ownership
7 Verify coverage for each of the companies we represent
8 Cannot Meet the Participation Requirement?
- Annual application period: November 15–December 15
- Available to otherwise eligible California small employers
- Normal minimum participation and contribution requirements may be waived
- Other employer and employee eligibility requirements still apply
- Applications and documentation should be prepared early
- Learn About Annual Small Group Enrollment Without Participation Requirements
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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.
- Ebook: Best practices for building a more engaged workforce UnitedHealthCare 8/2025
- See below for more details, quotes and enrollment.
Group Health #Carriers
We are authorized agents for the following companies and have the
"Official" Information
Employer Small Group Health Plans – Introduction
- Carriers – Companies Employer Group no index follow
- Aetna Employer Group Plan Coverage
- Blue Cross – Anthem – Employer Plans
- Blue Shield – Employer Group
- California Choice – Multiple Companies ONE Bill
- Health Net
- Kaiser Permanente – New Enrollment – Administrative
- Oscar – CIGNA + Oscar
- Sharp Health Plan
- SHOP – Covered CA for Small Business
- Sutter Employer Health Plans 2022
- UnitedHealthcare
Steve Shorr
Website Video #Introduction
Anthem Blue Cross
Group #Administrator Manual
- Authoritative answers to questions like:
- Adding or Terminating Employees
- Our Video explanation - 2nd Video
- Late Enrollee's Page 32
- Cal COBRA Information
- Our Video explanation - 2nd Video
- Adding or Terminating Employees
- New Enrollment Checklist
-
Blue Cross #Underwriting Rules 10/25
- Eligibility Guidelines
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
Visit our webpage on Proof of Ownership of your business
Just Enter your census or securely send us an excel spreadsheet or a list of employees and get instant proposals
for all these companies that we are Authorized Agents for in California
Recertification – Compliance with Participation and Premium Contribution
#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:
- Email us [email protected]
- Get a group Employer Quote
Kaiser Recertification Booklet
Rev May 2019
FAQ’s
Health Coverage #Guide
Art Gallagher
Health Care Reform FAQ's
Understanding Health Reform
***********************************
Compliance #Assistance Guide from DOL.Gov Health Benefits under Federal Law
- Health Care Reform Explained Kaiser Foundation Cartoon VIDEO
- Choosing a Health Plan for Your Small Business VIDEO DOL.gov
- ACA Quick Reference Guide California Small Group Employers Revision 2020 Word & Brown
- kff.org/health-policy-101/
- Health Savings Accounts
Employee Handbooks & Communications to Employees about their Health Benefits
Email us [email protected] for sample handbook, information
Related Pages in Participation & Contribution Requirements Section
EDD California 2025 Employers Guide #DE44
- Forms & Publications EDD
- FORMS REQUIRED TO GIVE NEW EMPLOYEES
- More workplace protections in 2022 New laws will shield employee health, safety and wages, but some ‘job killer’ bills were axed Los Angeles Times
- Social Security Forms
Child & Sibling Pages
- Annual Enrollment Without Participation Requirements
- EmployER Definition – Small Group Health Insurance
- Employer Group Association Plans California
- How to offer different Plans to owners employees
- Management Carve Outs – §2716 – Similarly Situated
- Proof in business document required
- Proof of Ownership for Small Business
- Carriers – Companies Employer Group ni
- Aetna Employer Group Plan Coverage
- Blue Cross – Anthem – Employer Health Plans
- California Choice – Multiple Companies ONE Bill
- Employer Group Blue Shield –
- Health Net Employer Small Group
- Kaiser Permanente Small Group Employer Health Plans
- Oscar – CIGNA + Oscar
- Quotes Employer Group – California – Instantly
- Sharp Health Plan
- SHOP – CCSB Covered CA for Small Business
- Sutter Employer Health Plans 2022
- UnitedHealthcare Small Employer Sales & Enrollment
- COBRA & California Cal-COBRA 36 months total coverage
- Participation & Premium Contribution Requirements
- Annual Enrollment Without Participation Requirements
- EmployER Definition – Small Group Health Insurance
- Employer Group Association Plans California
- How to offer different Plans to owners employees
- Management Carve Outs – §2716 – Similarly Situated
- Proof in business document required
- Proof of Ownership for Small Business
- Tax Credits Small Business §45 R