Finding the right group health plan for your business can be downright daunting: sorting through lists of insurers and plans; checking and rechecking dollars and totals for deductibles and co-pays; make sense of the plan’s limitations and exclusions; decipher a dictionary’s worth of insurance numbers. It’s enough to make anyone feel like a high school freshman again.
Texas insurance laws allow a wide variety of health insurance plans and packages. All group health insurance has its limitations, and finding the right employee health plan at the right price can be a challenge.
In Texas, the term “small employer” is a special insurance designation reserved for businesses with two to 50 eligible employees. The law provides some additional protections for these companies, including a 15 percent annual cap on rate increases due to health factors, a state-enforced guarantee that carriers cannot arbitrarily cut coverage, and a cooperative purchasing provision that lets small employers pool their purchasing power to negotiate lower rates.
For small business employees in Dallas, Houston and throughout Texas, the law provides more ways to maintain benefits after leaving a job and limits the waiting period before pre-existing conditions are covered.
In addition to these requirements, small employers can offer a wide variety of plans with virtually any combination of features and benefits.
Eligibility for small business coverage
Texas businesses with two to 50 eligible employees can obtain small employer coverage from either a traditional insurance company or a health maintenance organization (HMO). Eligible employees are defined as those who normally work at least 30 hours per week; is not classified as temporary, part-time or seasonal; and are not already covered by another group health scheme. A company’s owners are included in the total employee count.
The number of eligible employees—not total employees—determines whether a business is considered a small employer under Texas insurance law. For example, if your business has 60 total employees, it may still qualify if six of the workers are part-time and four have coverage through another source, such as a spouse’s plan.
If you decide to offer a group health plan to your employees, you must make it equally available to all of your eligible employees and their dependents.
Coverage is available under a small employer’s health benefit plan if at least 75 percent of a small employer’s eligible employees elect to be covered. Carriers must always “round up” when calculating the percentage. For example, a five-person business with only three employees who want to participate meets a 75 percent requirement by rounding up.
But in the case of a company with only two eligible employees, the law requires 100 percent participation. A husband and wife working in a business shall be counted as two separate employees. Neither employee is eligible for coverage as a dependent of the other.
If you provide a health plan, state regulations and a federal law called COBRA (Consolidated Omnibus Budget Reconciliation Act) allow employees to maintain benefits for a period of time after separation from the job. It is your legal responsibility to inform employees of their right to continue coverage. Former employees who choose to continue their coverage through COBRA or state continuation must pay the full cost of the plan. You are not obliged to contribute to their premiums, even if you have previously paid a share. Ask your carrier for details about your liability to former employees.
Types of plans offered
Health plans are classified as either “state-mandated plans” or “consumer choice plans.” A state-mandated plan provides certain minimum required features and coverages. A consumer choice plan is any plan developed by a carrier that excludes some state-mandated benefits. In general, consumer choice plans that don’t include all of the state-mandated coverages will save you money on your monthly premium.
Although consumer choice plans are sometimes called “standard plans,” be careful not to interpret the term to mean that the coverages provided are “standardized.” Each operator’s consumer choice plan may be different, and an operator may offer several different consumer choice plans.
Some state-mandated benefits are still required for consumer choice plans, including coverage for:
* Phenylketonuria treatment if prescription medication is covered.
* Complications of pregnancy.
* Minimum hospital stay after birth (federal mandate).
* Reconstructive surgery after a mastectomy (federally mandated).
Consumer Choice plans may vary depending on the type of carrier that offers the plan. For example, HMO consumer choice plans must pay for 20 outpatient mental health visits per enrollee per year, but this is not a requirement in indemnity plans. In addition, HMO consumer choice plans, unlike insurance companies, must include basic health services, such as inpatient, outpatient, and preventive services. Carriers may offer optional benefits that vary widely from plan to plan.
You don’t have time for all this research and number crunching. But can you really afford to leave it on your “maybe one day” list? As the cost of medical care rises, the risks of not having health insurance are more apparent than ever. Today, a single injury or illness – if not insured – can leave a family in financial ruin. In addition, health coverage is an important benefit of employment. You may not be able to hire and retain the best employees without offering it.
Another alternative to group health insurance plans, which can be prohibitive for many small businesses, is to offer individual health insurance options to your employees. By law, an employer is not allowed to contribute to these plans or it will be treated as group insurance under Texas State Law. But you can still help your employees get insured in a good plan and improve their health and wellness, and also improve employee retention in the process. If you are a small business owner who would like to offer affordable health insurance plans to your employees but cannot afford group health insurance, you should consider offering your employees the revolutionary, comprehensive individual health insurance solutions created by Precedent specifically for young, healthy individuals.
Precedent offers affordable individual health plans with catastrophic coverage but without a high deductible, and we offer these plans to your employees at a discount. For more information, visit us on our website, [http://www.precedent.com]. We offer a unique and innovative suite of individual health insurance solutions, including highly competitive HSA-eligible plans and an unparalleled “real-time” application and acceptance experience.