Please note: The answers to the Frequently Asked Questions are for general information purposes only. For more specific information, please refer to your member handbook or contact the customer service number located on the back of your insurance carrier ID card.
How many employees do I need before I am able to offer a group health insurance plan?
You must have a minimum of 2 employees or owners to qualify for a group health plan. These 2 people may be:
- Employer and Employee
- Two Partners
- Two Officers of a Corporation.
If you have employees, you will need to provide a copy of your most recent state quarterly wage report. This will be used to verify eligible employees. For partnerships or corporations, you will need a business license, articles of incorporation or other documents that can verify the legitimacy of your business and the participation of all people to be covered under the group health plan.
What other guidelines must an employer meet in order to offer group health insurance?
- The employer must contribute at least 50% of the employee only premium. The employer retains the option to contribute towards the premium for dependents.
- Usually, 75% percent of all eligible employees must enroll under the group plan (Depending on the number of employees).
- An 'Eligible Employee' is generally defined as any employee that works 25 or more hours per week for the employer, earning minimum wage, and paid via W-2. Employers have the option to define eligibility, as long as they are in compliance with federal and insurance carrier laws. If an employee is already covered under another health plan, they may be exempt from the 75% minimum participation guideline.
- Employees may not be denied access to a group health plan due to pre-existing conditions.
Do I have to offer COBRA to terminating employees or their dependents?
COBRA requires that group health plans sponsored by employers with 20 or more employees (includes full and part-time) in the prior year, offer employees and their families the opportunity for a temporary extension of health coverage. Group health coverage can be extended for 18, 29 or 36 months depending on the qualifying event.
For additional information about COBRA requirements and other Department of Labor (DOL) regulations, refer to www.dol.gov
I have an employee out on disability. How long am I required to keep him/her on the health insurance policy?
An ineligible employee is defined as one out on Long-Term Disability, someone who has not worked for six months due to illness or injury or three months due to leave of absence, or an employee not scheduled to return to work.
What qualifies as creditable coverage?
Creditable coverage, as defined under federal HIPAA guidelines, is considered as: group health plan coverage (including a governmental or church plan), group or individual health insurance coverage, Medicare, Medicaid, military-sponsored health care (CHAMPUS), a program of the Indian Health Service, a state health benefits risk pool, the FEHBP, a public health plan as defined in the federal HIPAA regulations, and any health benefits plan under section 5(e) of the Peace Corps Act. Not included as creditable coverage is any coverage that is exempt from the law; for example, dental-only coverage, or dental coverage that is provided in a separate policy or even in the same policy as medical, if such coverage is separately elected and results in additional premium.
How does an employer or insurance carrier know that an employee had prior group coverage?
The employee must provide proof of prior creditable coverage by presenting a Certification of Prior Group Health Plan Coverage, or other acceptable means of proof. This documentation can be obtained by contacting the former employer and/ or insurance carrier.
What is the difference between a referral and pre-authorization?
A plan participating PCP will issue a referral to a participating specialist when a covered member needs specialist care. Pre-authorization is when the health plan's medical care management department has given authorization to a provider that a procedure or treatment is listed as a covered benefit and is deemed medically necessary. Pre-authorization does not guarantee payment.
What is a Section 125 Plan, and how does it work?
Section 125 Premium Only Plans reduce income tax liabilities for both the employer and employee. This is because IRS Section 125 allows employees to make special salary deduction elections to pay their portion of medical insurance premiums using pretax or tax-free dollars.
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- Employees save 22.65% to 40% of their pre-tax Section 125 premium deductions in just federal income taxes alone. The actual tax savings are on city, state, and federal income taxes, including Social Security and Medicare taxes on all money employees use to pay for their portion of insurance premiums. Under a Section 125 POP employees take-home pay is increased which helps reduce the high cost of providing health coverage for family members.
- Employers benefit by reducing the matching Social Security and Medicare taxes, and sometimes Federal and State unemployment taxes. Depending on the state, employers may also be eligible for worker's compensation savings.