Even if your business doesn’t offer a group plan, your employees might be able to obtain coverage on their own, as individuals.
With individual coverage, insurers typically require a detailed medical history and sometimes a medical exam of the individual and any family members applying for coverage. The individual’s rates will depend on his or her medical condition; in some cases, the insurer may exclude coverage for preexisting conditions for up to 12 months. In 2014, when the Patient Protection and Affordable Care Act is fully implemented, waiting periods will be limited to 90 days. Currently, individuals in less than perfect health may be denied coverage altogether. However, when fully implemented in 2014, the Affordable Care Act will bring important changes to the individual market, including eliminating the ability of insurers to deny coverage based on preexisting conditions.
Under California law, if small firms pay insurance carriers directly for any portion of their employees’ coverage, then the insurance carrier is subject to specific rating rules and issue requirements. For all practical purposes, these rules make it impossible for an employer to directly pay for employees’ individual coverage.
To explore the possibility of reimbursing your employees for the cost of premiums for individual coverage, consult a tax professional.
Full implementation of the ACA will have a significant impact on individuals who do not get insurance through their employer. All such individuals will be required by law to obtain health insurance by 2014 or pay a penalty.
In 2014, a small business employer who does not offer coverage can direct employees to California’s individual health insurance exchange market. Individuals will be able to research a host of plans and purchase one for themselves through these online marketplaces. Small businesses with fewer than 50 employees are not required to provide insurance to their employees under the ACA, but it is important you understand the act’s Shared Responsibility Requirement.
To learn more about what the Affordable Care Act requires of small business and to find out more about how penalties are calculated see “Shared Responsibility Requirement.”
- Alternatives to Offering Group Coverage
- Group Coverage
- Health Maintenance Organizations (HMOs)
- Health Savings Accounts (HSAs)
- Individual Coverage
- Plan Characteristics and Types
- Point-of-Service Plan (POS)
- Preferred Provider Organizations (PPOs)
- Public or Subsidized Health Insurance
- Tiered Hospital Benefits
- Health Reimbursement Arrangements
- Plans Offered Under the Health Insurance Exchanges