When starting up a business it will be important to offer health insurance benefits to any employees. Although many of the state laws regarding small business health insurance are similar they can vary from state to state in some ways. This means that small business owners will have to familiarize themselves with the rules and regulations in their area in order to offer insurance. A basic group health insurance plan is usually the best route for offering health insurance to employees of small business without too much legal hassle.
Offering Coverage to Eligible Employees
When making arrangements to obtain a group health insurance plan for the employees of a small business it is important to understand the regulations regarding employee eligibility. The state insurance departments define eligible employees as those who work for the business at an average of 20 or 30 hours a week or more. The group health insurance benefits have to be offered equally to all eligible employees. According to insurance laws it is illegal to specifically exclude any eligible employees from enrolling in the group health insurance plan.
Which Employees Are Eligible?
In addition to equal opportunity insurance protection for employees, state laws also regulate a minimum participation percentage for group insurance policies. For example, many states require 50 to 75 percent of employees to participate in a group insurance plan in order for it to be considered legitimate. If the state’s minimum percentage of participation is not met the entire group of employees may be considered ineligible. However, employees who do not participate due to already having coverage will not count against the minimum requirement.
Mandatory Employee Cost Contributions
Many states have numerous rules and regulations in place which require small business employees to contribute financially to the cost of the group health insurance plan offered by their employer. The minimum contribution can vary from state to state, though it is usually anywhere from 10 to 50 percent. Some states require the employer to calculate the employee’s contribution based on their estimated individual coverage costs, whether or not the employee is also using the group health insurance coverage to protect their dependents too.
Consolidated Omnibus Budget Reconciliation Act
The COBRA (Consolidated Omnibus Budget Reconciliation Act) program is a federal act that governs group health insurance offered by small businesses, alongside state insurance laws. Businesses offering group health insurance policies to at least 20 employees are required to comply with the federal COBRA regulations. COBRA has strict guidelines on communication and allowing continued coverage to terminated employees. There may be sizable fines and penalties for small businesses failing to comply with COBRA’s rules and regulations.
Small businesses are not the same as big corporations, but that does not mean they don’t have to offer their employees benefits. Health insurance is a benefit which most employees would welcome having access to and would be required by law to contribute to, if the business offers group health insurance. Compliance will all state and federal laws will keep the small business and employees out of trouble while making sure all are covered appropriately.