Small Group Insurance – Understanding the Basics

Small Group Insurance – Understanding the Basics


Are you a small business owner looking to offer group benefits? You must first ask yourself, are you really a small business? What even is a small group in regards to group health insurance? A small group employer in the eyes of the CA Department of Insurance is: “defined as employing at least 1, but no more than 100, full-time (including full-time equivalent) employees 50% of its working days during the preceding calendar quarter or preceding calendar year and employing at least 1 employee on the first day of the plan year.”

So, how do you even calculate full-time and full-time equivalents? First, count the number of employees who work 30 or more hours per week per month. Next, add up the number of hours worked by part-time employees for the month and divide by 120 (e.g. 3 employees each working 20 hours per week x 4 weeks = 240 hours, divide by 120 = 2 FTE employees).

Now that we have gone over calculating the number of full-time employees, we should go over employee participation rates. Each insurer has their own requirements for the percentage of employees that must participate and enroll in their group’s coverage. Most carriers have a minimum requirement of at least 60% participating in their group insurance. SHOP Covered CA, the small business arm of Covered CA, has a minimum participation rate of 70%. If you are interested in a given carrier, please do not hesitate to contact us so we can go over each carriers participation and documentation requirements. Carriers will exclude employees from the participation rate if they have valid waivers for not participating such as: on Medicare, Tricare, Medi-Cal, spousal coverage COBRA/CalCOBRA, MediExcel (cross-border plans). Some carriers are even accepting waivers for on- or off-exchange individual plans (Anthem & UnitedHealthcare through 12/15/2018) while Oscar is allowing on-exchange, subsidized employees to waive their group coverage.

Currently, some carriers are offering more relaxed participation rates for new business. Anthem is allowing groups from 7/1/2018-12/15/2018 to enroll only 65% if 1-4 employees enroll or 25% participation rate if 5 or more enroll. Through 9/30/2018, Blue Shield is allowing groups with 5 or more enrolled to have a 25% participation rate. Health Net: 66% for 1-5 enrolled, 50% for 6+ enrolled through 9/30/2018. Kaiser – no DE9C required for 6+ enrolled through 12/1/2018. This is great news for many small businesses, especially for those that have had trouble enrolling due to not enough employees being interested in a group plan.

Furthermore, you may ask yourself, “How much do I as the employer have to spend on my employees’ plans?” As an employer, most carriers require you to contribute at least 50% towards your employees’ health insurance premium. Many carriers will also allow you to contribute a flat dollar amount of $100. Please review your budget and think about how much you want to spend on your employees? Sometimes $100 is not enough to convince your employees to hop onto a group plan, especially with premiums steadily rising every year with wage growth not keeping up.

When deciding on a carrier, it is always important to understand the provider and drug formularies of each carrier. Ask your key employees if they have any preferred doctors, hospitals or brand-name prescriptions that they would like covered. You want to make sure that you are offering plans that cover at least some of the preferred doctors and hospital systems your employees hold dear to their health.

Once you have figured out your number of employees, the number that are expected to participate and which carrier(s) you are interested in, we can then proceed and submit your group’s application. We will need each employee’s application or valid waiver, the employer (master) application, as well as applicable payroll and business ownership documentation. Each carrier has their own documentation requirements so please do not hesitate to contact us to go over the requirements and get your application running smoothly.

At Solid Health Insurance Services, our services are completely free of charge and we will never ask you for any compensation. We want to help make your enrollment process as easy as possible and we will continue to service your group as your business and the insurance marketplace continue changing. Our mission at Solid Health Insurance Services is to find for you affordable health insurance, life insurance, long-term care insurance and travel insurance which fits your medical needs and budget for your individual, family and business needs. Please contact us at 310-909-6135 or at [email protected]



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