What Constitutes a Group for Health Insurance? - Capstone Brokerage

By: Caitlyn Bronson, Zane Benefits, February 2018

When the Affordable Care Act passed in 2010, U.S. businesses received a new federal requirement: provide health insurance to all full-time employees or face steep penalties from the IRS. This is known as the employer mandate.

The new law made an exception, though. Small businesses with fewer than 50 employees weren’t subject to the employer mandate. This is still the case today.

Most small businesses still want to provide health benefits, though. Offering a good health benefits package helps businesses hire and keep talented workers, and many businesses feel they have a duty to provide for their employees.

But meeting group health insurance requirements is often difficult. In addition to the costly premiums, small businesses question whether they’re large enough to qualify for group coverage and if they must meet any participation requirements.

In this post, we’ll answer these questions as well as discuss some group health insurance alternatives for businesses interested in other approaches to benefits.
What do insurers consider a “group” for group health insurance?
Group health insurance is a single policy issued to a group of people and sometimes their dependents. Because group coverage is often associated with large businesses, though, many small businesses wonder whether their business is eligible for group coverage.

Under federal law, insurers are required to provide small businesses with group coverage should the business choose to purchase it—regardless of size. That means that even businesses with between just 2 and 50 full-time employees can find coverage.

Because owners are generally counted as employees, partnerships or sole proprietorships with one employee also qualify for group coverage.

Additionally, some states consider self-employed individuals to be “groups” of one. In these cases, self-employed individuals can also purchase group coverage. This group coverage may or may not be guaranteed issue on the small group market.

Definitions of “group” health insurance and guaranteed issue requirements by state
Though all states are required to guarantee issue coverage to small groups of 2 to 50, some extend coverage to groups of 1.

Here’s a chart explaining how each state defines “group” health insurance as well as the guaranteed issue requirements for self-employed groups of one.

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