Who Is Eligible for Small Business Group Health Insurance?In the continuing search for quality health insurance in the economic downturn, some people have found that they are able to qualify for small business group health insurance, even if they have as few as two people in their business. Group health insurance plans are advantageous for those who need insurance to cover pre-existing conditions, even though the plans may be expensive. Pre-existing conditions-conditions that you had before your new health insurance plan begins-include chronic health problems such as diabetes, high blood pressure, cancer, extreme obesity, rheumatoid arthritis and many other medical conditions. Individual health insurance plans are allowed to limit coverage, charge higher premiums, or refuse to cover such conditions. Federal laws, however, require group insurance plans to cover pre-existing conditions. The Health Insurance Portability and Accountability Act, or HIPAA, passed in 1997, covers many aspects of health care in the United States. HIPAA allows a gap of no more than 63 days between your previous insurance coverage and your new insurance coverage for the new plan to cover pre-existing conditions from the beginning. If you have lacked coverage for more than 63 days, HIPAA allows the new plans to exclude a pre-existing condition for a period of up to 12-18 months. The cost of group insurance plans varies widely and could be expensive. The premiums can be significantly more for tiny businesses than for those in larger businesses. These plans may implement surcharges of up to 30% or more for the smallest businesses of one, two or three people. Individuals in the business also may be required to answer questions about their health to allow the insurance companies to assess risks in setting their premiums. The group plans, however, are very attractive to those who cannot find individual insurance plans that will cover their pre-existing conditions at any price. State laws also apply to group health insurance plans and differ considerably among the states. Being defined as a group means that a person, a couple, or a group of individuals must prove that they have a business. Freelancing, consulting, or contract work may be eligible depending on state laws. The business does not necessarily have to be full time. Laws also vary on how many hours an employee must work in order to qualify as part of the group. In order to qualify as a small business, the business must be a form recognized as such by the state, such as a limited liability corporation, S corporation, or other legitimate business set-up. A business tax return or a Schedule C tax form that shows self-employment income may also be required to demonstrate a legitimate business for small business group health plans. You may need to have an employer identification number from the IRS and must file any required paperwork for the state. In most states, a group is considered two or more individuals. In order to form such groups, some employees who have lost well-paying jobs and group health insurance benefits are finding ways to form their own businesses by hiring one part-time employee or a relative to assist them in consulting or freelance work. Others have begun typical low-cost start-ups such as landscaping or childcare businesses that may be only part-time jobs in addition to their regular employment. Some states may permit one employee out of a group of two in a small business to refuse coverage if both are eligible participants, so that the remaining one participant becomes the recipient of the insurance coverage. Even though the laws usually define a group as two people or more, a few states permit sole proprietors to be considered eligible for group health plans. The Kaiser Family Foundation lists the following states that have guaranteed issue for self-employed group of one: Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, Michigan, Mississippi, New Hampshire, North Carolina, Rhode Island and Vermont. Guaranteed issue means that coverage cannot be refused because of the health status of any member of the group. The insurance commissioner's office of your state will have current information on availability of group coverage for sole proprietors. Because state laws vary in many areas of group insurance, insurance brokers specializing in employee benefits can help very small groups seeking the best fit for their group health insurance needs in a particular state. |
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