If you own a small business and are considering offering health insurance to your employees, it is essential that you understand the basic regulations involving employee benefits of this type. The insurance industry is regulated at the state level, so each state sets its own laws regarding the implementation of insurance benefits. However, the majority of states have similar, if not identical, laws detailing how group plans and their participants must be handled.
Eligible Employees
Group health insurance coverage must be made available to every eligible employee. Most states define an eligible employee as one who works for your company an average of at least 25 to 30 hours per week. It is against health insurance regulations for any employer to selectively exclude any individual, or otherwise restrict or prohibit enrollment in a health insurance program.
Minimum Participation
A large enough percentage of all eligible employees must participate in the plan offered by your company. If too few employees choose to enroll, the group will be disqualified, leaving everyone without coverage. Most states have adopted regulations stipulating that at least 50 to 75 percent of all eligible employees must participate in your company's group health insurance program. Thankfully, those employees who decline enrollment in your group plan because they already have coverage elsewhere do not negatively affect minimum participation calculations.
Contribution Requirements
The majority of states require employers to share in the cost of health insurance coverage for their employees. Companies are required to pay between 10 and 50 percent of each employee's monthly premium. Depending on your state, the number of workers participating in the plan, and the actual monthly cost of the policy, these mandatory contributions could comprise a significant expense.
Continuation of Benefits
The federal government, and nearly every state, has instituted group health insurance regulations allowing terminated employees to continue their benefits. As the employer, you must facilitate such continuation, and remain compliant with respect to the dissemination of information about the plan, continuation of benefits, and available educational resources. Hefty fines may be imposed on employers who fail to properly follow the rules.
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