Health Insurance for Your Small Business

Here are some Frequently Asked Questions about small business health insurance.  If your question is not answered below, please contact us so we can add it to our list.

What is considered a small group?

The definition of a “Small group employer” is a business with 2 to 50 full-time employees.  If you have one or no employees, you should consider plans offered through our individual and family insurance. If you have over 50 employees, you should consider larger group insurance.

What evidence does a group need in order to prove that they qualify as a small group insurance?

A group must provide evidence that they are a viable business with paid employees in order to qualify for small group insurance.  A Quarterly Wage and Withholding Report (DE 6) would be one example of employment evidence.

Do all my employees have to participate in the plan to be covered for health insurance?

Most insurance providers require that a minimum of 70 percent of full-time employees be covered.  If an employee shows evidence that they already have health insurance provided through a spouse, they can be exempt from the 70% minimum calculation.

Can a company offer small group insurance for its management team but not for other employees? 

No, if an employer offers coverage, it must extend that offer to all full-time employees. The employer may also include part-time employees (defined as 20 to 29 hours per week) as part of the group, as long as all part-time employees are offered the coverage.

Does the employer have to pay the total cost the small group insurance premium?

No, employers can pay a part of the premium and employees can contribute the remainder.  The minimum amount an employer must pay varies by health insurance provider.

What are my rights as a small group employer?

Guaranteed issue.  Under most state laws, every small employer has the right to buy any health insurance product sold by an insurance provider to small employers. A product is a package containing a list of benefits (what the plan covers) and a type of service delivery (e.g., HMO or PPO).  No company shall be refused health insurance based on the current or previous health conditions of any or all of its employees.

Guaranteed renewal. An insurance provider may not cancel a small group’s coverage just because one or more enrollees gets very sick and generates high health care costs. An insurance provider may only cancel coverage for fraud or failure to pay premiums.

Rating protections. California law limits insurance provider"s ability to charge low rates to groups whose members are in good health and high rates to those that include individuals in poor health. Standard rates may only be based on age, geographic location, and family size. Plans must set actual premiums no more than 10 percent above or below the standard rate. This is called the Risk Adjustment Factor (RAF).  The RAF creates a “rate bandA within which the carrier may adjust employer rates for risk factors such as previous use of health services or industry type.

The law also limits an insurance provider’s ability to raise a small employer’s premium due to changes in employee health status or other risk factors. Carriers may not increase the RAF more than 10% in a single year. So, for example, a group that was assigned an RAF of 1.0 in Year 1 could receive an RAF no higher than 1.10 in Year 2.

What is the RAF?

RAF stands for Risk Adjustment Factor. The RAF is the only way an insurance provider may vary rates among different groups to reflect risk factors such as health history, claims experience, and industry. By limiting the RAF to a rate band (between 90% and 110% of the standard rate), the law requires plans to charge each small group premiums that are comparable to those for similar groups.

How do I get a quote? 

A census is required before you can get a quote—but it is simpler than it sounds.  A census is simply a list of every employeeA>?,??,>s name, zip code, birth date and dependent status.  Enter your company’s zip code in the box above and hit the “Get Quote” button.  You will then be prompted to enter the census data you just collected.  Once you enter that data, you will be able to get quotes and compare plans and prices.