Group Health

Group Health Insurance is the most crucial part of a benefits package for obtaining and retaining the kind of employees you are relying on to help grow your business. It is no secret that in our current environment, it has become a challenge for small employers in California to maintain affordable health coverage for their employees due to ever increasing costs.

What you’ll discover in this report:

Eligibility Requirements: The Nuts and Bolts!

In order to be considered for group health coverage, a carrier will require that there be a minimum of two employees. The eligible employee is one who works on a full time basis with a normal work week of generally 30 or more hours for compensation.

Each year an employer should verify that his group still meets the eligibility requirements for group coverage. A health insurance carrier reviews the application for compliance when a group starts a new plan, and may audit the group each year at renewal.

The following items are also necessary for compliance:

  1. At least 75 % of the employees must be employed in California (if you are in another state, clearly, this doesn't apply!)
  2. Only 25 % can waive coverage without having other coverage elsewhere
  3. The employer must pay at least 50% of the premium
  4. The employer has the right to decide on a waiting period for new employees to enroll in the plan - 0 to 6 months in California.

Type of Group Plans Available

  • HMO:  This managed Care plan gives your employees the security of lower out-of-pocket expenses, comprehensive coverage and virtually no claim forms to fill out. Employees choose a primary care physician who will manage medical care and refer employees to specialists and hospitals within the network.
  • POS:  Your employees have the freedom to use the managed care network of physicians or choose doctors and hospitals outside the network. In network, the employees select a primary care physician (PCP) to coordinate their needs and to refer them to in-network specialists. By going out-of-network employees may encounter higher out-of- pocket expense and more paperwork - but a lot more freedom.  Unfortunately, this is typically a very expensive insurance program.
  • OPEN ACCESS:  The open access plan is typically offered with HMOs, and it provides employees with direct access to most specialists (like a female gynecologist) within the network without a referral.  Generally, the specialist must be in the HMO network in which the primary care physician is also participating, and this is generally for office visits only.  Control of surgeries and other exams generally must be retained by the primary care doctor (emergencies excepted, of course).  By going direct and without a referral, the employees will encounter a slightly higher office copay.
  • PPO:  This preferred provider organization gives the employees the largest selections of network doctors and hospitals. If the employee uses the network, he receives a higher level of coverage; if he chooses out-of-network physicians or hospitals, he pays a higher share of the cost. Various plan designs are available.
  • HSA:   A Health Savings Account is like a 401K for healthcare. It is a tax advantaged personal savings or investment account that individuals can use to save and pay for their qualified healthcare expenses, now or in the future. Paired with a qualified high deductible plan, the HSA  is a powerful tool that allows consumers to be more actively involved in their health care decisions. 
  • Dental Coverage:  May be purchased as a standalone plan or as a rider (an add-on) to a group health plan.  There are various types, from Dental HMOs to complete free-wheeling "go to any dentist" plans.  The Dental HMOs provide the most payout, but they retain complete control over your dental care and, as such, are not always popular.  PPO dental plans and the open plans are typically more popular, but more expensive, and they pay a lesser percentage of your dental bills.
  • Vision Coverage:   May also be purchase as a rider (an add-on) to group health plans.  Mostly, unless your group is quite large, these are nothing more than discount plans that require you to go to a limited number of outlets.

Important Definitions:

Office Visit Co-Payment:   Employee payment for office visits (Options from $5-$50)

Deductibles:   An amount that may be deducted by the insurance carrier from the total that they will pay toward hospital and other services, in-network and/or out-of-network (Options from $500-$2500 or more)

Network of Participating Physicians:   Doctors who are contracted with the plan

RX Coverage:   Coverage for prescribed medications. Many plans include tiered RX levels of coverage Generic / Name Brand / Non-Formulary Drugs (i.e. $10/25/50) and often the brand named drugs will have a calendar year deductible.

Guaranteed Issue:   In California small group plans, no one can be declined due to a pre-existing condition. They may however, be subject to a pre-existing condition exclusion for six months under a PPO plan.

COBRA or Insurance after Work:

COBRA (Consolidate Omnibus Budget Reconciliation Act of 1985) requires businesses to extend their group health insurance coverage to an employee who leaves or is terminated for reasons other than cause. The employee must pay the premium to the employer, who in turn includes it with his monthly payment to the company.

In California, companies with two to nineteen employees must continue to provide coverage for twelve months after termination. The coverage must also be offered to the employee’s spouse and child. All potential beneficiaries must apply for continued coverage within 30 days of termination.

Additional Considerations for the Employer:

An employer must offer coverage to all eligible employees. Where the employer pays 100%, all employees must enroll unless they sign a waiver that they have other coverage. In plans where employees are asked to contribute, employees may waive coverage if they have other coverage or cannot afford coverage. However, if more than 25 % of the group declines coverage without other health insurance elsewhere, it will make the entire group ineligible as the group is not in compliance.

Today, more than ever before, employers need to understand the requirements in offering a group plan. Health insurance is becoming more complicated every day. At Huggins Dreckman Insurance, we are committed to educating employers and helping you to streamline your plans during these difficult economic times.