This is a common question from many of our small business owners. Some operate under a corporate veil and some as a sole proprietorship. Either way, you must meet certain tests in order for the health insurance carriers to accept your application for coverage.
First and foremost, the State is irrelevant. The rules for small business group are the same in Texas as they are in Florida or any other State for that matter.
In some companies, employees will be scattered about the Country, but generally, the State where the company is domiciled will be the State where the policy is written. So long as you offer a PPO policy for the employees, the network will extend nationwide in most cases. For example, BCBS of Texas uses the Blue Choice PPO network and that network has just as many doctors and hospitals in Texas as it does in Illinois. Some carriers are not as widely known in other parts of the U.S., but as long as you stick with a household name for your carrier, you’ll be fine.
A second criteria which will impact whether you can form group health for your small business is how you are structured? Small businesses come in many flavors, but we normally see just two different kinds:
- Businesses that operate under a corporate entity such as an LLC, C Corp or S Corp with one or more owners, but that have many full time, W2 employees (or 1099s). In this case, 75% of the “eligible employees” must take the insurance plan(s) you offer. An employee is eligible if he/she is considered full time working at least 30 hours per week and is not covered under another policy (like the Spouse’s plan from their employer).
- Husband/Wife LLC teams or Partnerships (common in Law Firms) that really just have the Owners or Partners to cover without full time employees. You still need a minimum of two participants to form a small group plan, so extra W2s are not necessary and you can still form the group. If you do have extra staff you want to offer the plan to, then 75% of the eligible staff must take the plan or “no dice”.
The third criteria to form a small group is that you must pay for at least 50% of the eligible employees’ monthly premium. This sounds daunting until you realize that the premiums are 100% tax deductible and can be used as a carrot to entice better hires for your company – think of this like advertising masked as insurance. Most employers build this cost into the salary packages they offer to potential hires and so can you.
Just remember that your company small group health plan will generally cost about 20-30% less than a comparable HMO policy in Texas. Per person, you can even buy a group PPO for about the same premium as an individual HMO policy. Since 90% of you are already pissed off about the fact that you can no longer buy a PPO as an individual, this will give you another option.
At the end of the day, small group plans are simply a better choice for the business owner. If you agree and want to pursue this, just call us at 866.270.6209 or fill out our Small Group Health Insurance Request Form.