A Brief Overview Of California Group Health Insurance
Many employers cringe at the thought of having to offer California group health insurance to their employees. They feel as though the process is long, difficult, and overly expensive. Employers want to provide good coverage, but they do not want to bankrupt their company while doing so. On the flip side, many employees feel as though good health insurance should always be provided, and that employers should only choose plans that benefits employees the most, regardless of cost. CA group health insurance plans can offer great options for all parties involved. Below are the benefits of group insurance from both the employee and the employer’s prospective.
Benefits For The Employer
In 1992, The California State Legislature passed Assembly Bill 1672 to regulate health insurance companies operating in California. This piece of legislation modified the laws and made practices fairer for consumers. The major components of the bill included: allowing coverage for companies that have between two and fifty employees and are classified as either a sole proprietorship, an LLC, an LLP, or a corporation; guaranteeing insurance coverage for these companies; and imposing mandatory price limits on coverage.
These changes allowed employers to purchase benefit packages, at a fair price, with no question of coverage for all employees and their dependants regardless of health condition. Insurance companies could no longer deny or cancel coverage for individuals with a history of poor health as long as the coverage was purchased as a CA group health insurance plan. The mandatory price limits imposed on such coverage dictated that insurers had to limit the price range that could be charged for specific small groups. Insurance providers now had to base their pricing on the ages of the employees, and how the overall company fit into the established Risk Adjustment Factor (RAF) for the county it resides in. For example, if a company has all healthy employees, the insurance provider may offer a maximum reduction in price of up to ten percent below the set RAF. On the other hand, if the company has several employees with health conditions, the insurance provider cannot charge more than ten percent above the set RAF.
These legislative changes helped to put employer’s minds at ease, by allowing them to offer better coverage options without the worry of inflated costs.
Benefits For The Employee
Quite possibly the number one benefit for employees seeking group medical insurance in California is that he or she will not be denied coverage, even if he or she has pre-existing health conditions. Unlike with individual health insurance plans, small group plans cannot discriminate amongst employees or deny coverage for any reason.
In addition to not being denied coverage by the insurance company, employers must offer insurance to a certain number of workers. Employers who elect to go with a small group plan must offer coverage to, and must enroll, a minimum of seventy-five percent of all eligible employees. Employees are considered eligible if they work at least thirty hours per week. Only employees who are covered by another group plan (usually through a spouse’s employer) can opt out of the offered coverage.
Finally, employees do not have to worry about paying full price for health insurance. Employers cannot defer one hundred percent of the monthly cost of CA group health insurance to the employees. California state law states that an employer must contribute a minimum of fifty percent of the employee only cost of the insurance plan selected. This safeguard was put in place to further guarantee that participation requirements could easily be met and that fair business practices would be carried out.
While group medical insurance in California can be expensive, and it is sometimes difficult for a business owner currently offering no health insurance to begin paying $2,000 or more per month, there are several benefits for both parties. Lower rates, guaranteed coverage, price limits, and guaranteed renewal are benefits that are worthwhile for everyone involved.
