Important Things To Know About Group Health Insurance

The statements contained in this fact sheet primarily apply to groups of 2 to 50 employees. They are intended to provide a general understanding of group health insurance underwriting and policy issues. Each state and insurance carrier may vary somewhat from these guidelines. Consult with a professional health insurance broker for specific information concerning your state or your insurance carrier's variations from these guidelines.

Contribution
In order for employers to qualify for a group health insurance plan the employer must contribute no less than 50% of the employee premium. Contributions toward dependent medical premiums are generally not required. Alternatively, employers are given a choice of contributing no less than 25 % of the costs of the employee and dependents coverage. Be wary of any agent who tells you that no employer contribution is required. Chances are they are either trying to sell you individual policies billed to your business or they have misstated the employer's contribution on the employer's application for a group health insurance plan.

Participation
If the employer is paying 100% of the employees' premiums, all eligible employees must enroll for coverage whether covered elsewhere or not. If the employer pays less than 100% of the employees' monthly premium, at least 75% of the eligible employees must enroll. Excluded from the calculation are employees who are covered under their spouses' group health insurance plan, or in some cases, Medicare. However, regardless of the number of employees covered under their spouses' plans at least 50% of all employees must enroll in the plan. Here is an example:

Number of eligible employees	15	This Example also meets the second participation test because there are more than 50% (9 out of 15 or 60%) of the groups employees participating in the plan.
Eligible employees who are covered under spouses' group health insurance plans	3
Remaining eligible employees	12
Minimum numbers of participants in order to qualify for group plan (75%)	9

But... many insurance carriers, and the majority of regulators,allow employers to establish classes of employees which may or may not be eligible for group health insurance. In such cases, only employees in the eligible class are used in the percentage calculating described above.
Also... at the sole discretion of the insurance carrier, independent contractors such as commissioned salespeople, may or may not be considered eligible for coverage. Consult with your broker to identify carriers which accept independent contractors.

Underwriting
Generally, in accordance with federal law, groups of 2-50 employees cannot be turned down for group health insurance. However, insurance carriers are given the discretion to charge premiums that are higher than their "standard" rates if the medical profile of the group warrants the increase. No employee may be singled out for increases, they are applied uniformly to all members of the group. Also, preexisting conditions generally may not be excluded for any employee or dependent who has had prior health insurance which did not lapse more than 63 days prior to the beginning of their new health plan. Some states have statutory caps on premium surcharges, others do not. Therefore, group health insurance quotes are merely rate calculations. Final rates are always determined after review of each employee's medical history and physical condition. Accurate health insurance quotations are possible only if medical information is provided to your broker prior to requesting a quote.