Since the Affordable Care Act (ACA) became law 10 years ago, the number of Americans without health insurance has declined dramatically. The uninsured rate in California was 17.2% in 2013, as compared to 7.2% in 2018. (Final figures for 2019 are not yet available.) Among those with health insurance, a majority get their coverage through their employer.
California is one of the five states with the greatest number of people getting their health insurance through an employer-sponsored plan, according to the Kaiser Family Foundation (KFF) data. Based on 2019 reporting, 47% of Californians, or about 18.3 million people, have employment-based health insurance.
Businesses choose to offer health insurance to employees for many reasons, including:
- Tax Advantages: Employers can generally deduct their expenses for providing health insurance to employees and dependents on the state and federal taxes for their businesses.
- Recruitment: Offering health insurance and other benefits helps employers attract new employees, according to a survey by the Society for Human Resource Management (SHRM).
- Employee Retention: Another SHRM survey found half of employees consider benefits a key factor in their decision to stay on the job. In fact, 46% reported health insurance was the deciding factor or a positive influence in selecting their job.
- Comprehensive Health Insurance Protects Employees: The Essential Health Benefits (EHBs) required by the ACA provide valuable coverage for employees, including emergency services, hospitalization, patient services, maternity care, lab services, preventive and wellness services, chronic disease management benefits, and more.
Employers interested in evaluating health coverage can benefit by talking with an employee benefits agent. The services of an agent are typically available at no cost, and can often save an employer money. That’s because an agent will know your local marketplace, the health care providers that are part of each health plan’s network, and the value-added benefits that may be available.
Sometimes a business owner comparing plans without guidance from a licensed insurance professional may be inclined to think individual health insurance or a blanket health insurance policy is a more affordable alternative to group health coverage. However, there are limitations in those kinds of policies.
For example, a blanket health policy may offer only limited benefits, perhaps in connection with an accident. Blanket health insurance policies also typically differ from a group health policy, because a blanket policy may offer coverage up to a specified limit — $5,000, $10,000, $25,000, or $50,000 during the life of the plan. In contrast, an ACA compliant group health plan cannot limit coverage to a specified amount, although members could be subject to certain co-pay amounts or a coinsurance amount.
Likewise, an employer-sponsored group health plan may be better than coverage through an IFP (Individual and Family Plan) or Association Health Plan, also known as a multiple employer welfare arrangement (MEWA). These plans may limit payouts and often do not include the broad range of covered services under an ACA-compliant group health plan. In fact, California law strictly limits and regulates health insurance through associations, as outlined in a 2019 memo distributed by the California Association of Managed Health Care. State regulators and California legislators believe residents are better served by other health insurance programs.
Finding the Right Coverage for Your Employees
Staying healthy and having access to health care is important to employees (and their family members). That’s especially true during times like those we’re facing right now. If you want to find out more about the advantages, costs, and value-added benefits of group health care, talk with your insurance agent. If you don’t have an agent, you can find one near you using our agent directory.
In the wake of COVID-19, many employers are considering whether they can and should be offering health insurance benefits to employees. If you have questions on how to get group health insurance and what to consider before making your selection, we have answers for you. We have details on the regulatory requirements mandated by the Affordable Care Act (ACA), your cost investment as well as the options.
What’s Included in Coverage
If you offer health insurance that is Affordable Care Act (ACA) compliant, the ACA mandates 10 essential health benefits (EHBs), including:
- Ambulatory patient services (care without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care for dependents
Plans are available in four ACA metal tiers: Bronze, Silver, Gold, and Platinum. Each tier represents a different level of cost sharing for insured members, as shown below:
|ACA Metal Tier||Health Plan/Insurance Pays||Insured Pays|
AHIP, formerly known as America’s Health Insurance Plans, is the health insurance industry’s leading trade association, with members representing some of the country’s largest health insurers. AHIP reported in May 2020 that many of its members have expanded coverage to cover the cost of COVID-19 testing with no out-of-pocket expenses to members. If you are looking for specific health plan information, visit the AHIP web page and scroll down to the insurer that interests you most, or talk with your employee benefits agent.
For businesses subject to the ACA employer mandate (that affects employers with 50 or more full-time and full-time equivalent employees), in addition to offering coverage for the EHBs above, the cost to employees must be affordable. This is determined by whether the employee share of the premium for the lowest-priced, self-only coverage does not exceed 9.78% of the employee’s household income for 2020. If the employee’s share of the cost does exceed this threshold, the employer must increase the employee’s subsidy to make coverage more affordable.
If you’re not sure how to calculate your group size to see if your business is an Applicable Large Employer (subject to the employer mandate), you can link here to use the Small Business Health Options Program (SHOP) calculator on the Healthcare.gov website. Alternatively, you can use the calculators on the CaliforniaChoice private health exchange website. (Just click on “ACA Calculators” in the lower-right corner of the home page.)
Available to Groups of Two or More
While a group health plan does require you to have a group, you don’t have to be a “large” group to qualify for coverage. Health plans and insurers will write groups with as few as two covered persons (a business owner and an employee). However, some carriers will not write a policy for a husband and wife group if both are owners of the business, or if it is a sole proprietorship. Other business types like an LLC, S-Corp, C-Corp, and Partnerships where the spouse is a W-2 employee are acceptable.
It does not matter whether you or your employees have pre-existing health conditions. Under the ACA, insurers cannot refuse to cover you or charge you more because of a pre-existing condition.
If you select CaliforniaChoice for your business, you choose your own contribution amount – a fixed dollar amount or a fixed percentage of the cost for a specific health plan. For example, you could choose 50% of the lowest-cost health plan in your area. Then your employees use the contribution you make toward their coverage to pay for whatever health plan they like best. If an employee chooses a plan with a premium that exceeds your Defined Contribution, he or she simply pays the difference.
The amount you select is locked-in for one year. At renewal, you have the flexibility to adjust your Defined Contribution, up or down, so you can lock-in the cost for another 12 months.
With CaliforniaChoice, you and your employees have access to more than 50 benefit plan designs through a single program. With Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Exclusive Provider Organization (EPO), and other coverage options available from eight different health plans, it’s easy for employees to find coverage that fits their health care needs and budget. They can choose from popular regional providers like Sutter Health Plus and Western Health Advantage in Northern and Central California, Oscar Health in Los Angeles and Orange counties, and Sharp Health Plan in San Diego. Statewide, your employees can choose from Anthem Blue Cross, Kaiser Permanente, Health Net, and UnitedHealthcare.
You can contribute – or not contribute – to the cost of coverage for your employee’s spouse and dependent children. The contribution you make just needs to be the same for all employees.
If your business doesn’t qualify for group coverage, you may be interested in pursuing individual health insurance; visit the Covered California public health insurance exchange for Individual & Family Plan (IFP) information.
Offering Benefits Helps Employees and Your Business
Employee benefits like health insurance is an advantage your employees and helps you stand out as an employer. According to multiple surveys by the Society for Human Resource Management (SHRM) and MetLife, employees are seeking a better work and benefits experience. That point has been emphasized as many Americans have faced unexpected health challenges in 2020.
Remember, the cost of employee health insurance is deductible as a routine business expense. Depending on your group size, average employee wage, and where you purchase your group health coverage, you may also qualify for a tax credit as outlined at Healthcare.gov.
How to Learn More
Many factors influence the cost of group health coverage: group size, ages of employees, the type of coverage offered, etc. The best way to find out what your potential cost would be for your group is to talk with an employee benefits broker. If you choose coverage from CaliforniaChoice, your representative will work with you to help you determine your Defined Contribution. If you don’t have a current insurance broker, we’ll help you find one who can provide a custom quote for your employees.
In response to the COVID-19 pandemic, the Department of Labor (DOL) has released a new rule allowing laid off or furloughed workers more time to sign up for health insurance continuation under COBRA, the Consolidated Omnibus Budget Reconciliation Act.
COBRA, which applies to group health insurance sponsored by businesses with 20 or more employees, typically gives workers losing job-based coverage 60 days to decide if they want to continue coverage. The new DOL guidance extends the timeframes affecting participants’ rights to coverage, portability, and continuation, as is the time to file a benefit claim or appeal denied claims.
The 60-day countdown clock does not start ticking until the end of the COVID-19 “outbreak period,” a date that is not yet known and could be months away. Depending on when an individual loses (or lost) his or her job in 2020, he or she has a minimum of 120 days to elect COBRA and possibly longer.
For example, if someone was laid off in April and the government determines the national emergency ends August 31, the “regular” 60-day COBRA election period would start on September 1 (and continue into October).
Continuing with this example, if coverage ended effective April 30 because of the layoff, the employee could wait until December to make a decision his or her COBRA decision – with coverage retroactive to May.
Details on the extension appear in the jointly published DOL and IRS document, Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak. The Society of Human Resource Management (SHRM) also offers useful information here.
While the new rule gives laid-off and furloughed workers a longer period to act on COBRA, there are risks for employees. They could be on the hook for thousands of dollars in back premium because workers have to pay both their portion of the premium for coverage – plus the share previously paid by their employer and a 2% administrative fee.
The DOL’s COVID-19 Frequently Asked Questions addresses other issues and provides additional guidance for employers, sponsors, and participants concerning the outbreak and COBRA.
With an infectious disease outbreak, such as the current coronavirus (COVID-19) pandemic, employers of all sizes are concerned about the best way to respond. Many are asking, “What can I do to protect my employees and customers?” We share some guidance from the Centers for Disease Control and Prevention (CDC) below.
The CDC recommends these steps to protect employees and limit disruption to your business:
- Identify a workplace coordinator who will be responsible for COVID-19 issues and their impact on your workplace.
- Examine your workplace policies for leave, telework, and employee compensation. Leave policies should be flexible and non-punitive – allowing sick employees to stay home and away from co-workers. They should also accommodate employees who need to stay home with children if there are school or childcare closures – or to care for sick family members.
- Use flexible worksites and flexible work hours, where possible. This can be achieved through telework (work from home arrangements) and, in some cases, staggered work schedules to adhere to social distancing (maintaining a distance between workers of approximately six feet).
- Review leave policies with all employees. Provide information about any available employee assistance programs or services. Share information with workers about steps they can take to protect themselves – at work and at home.
- Identify workers and business functions that are essential and the logistics required to maintain your business operations. Explore ways to keep your business open if municipal, county, or state regulations will allow your business to operate. (Some employers, like restaurants, movie theaters, and gyms have been ordered to limit services or shut down completely subject to a state order effective in mid-July.)
- Prepare business continuity plans for significant absenteeism, supply chain disruptions, or changes in the ways you need to conduct business.
- Establish an emergency communications plan, with key contacts identified (with back-ups), chain of communications, including suppliers and customers) and processes for tracking and communicating about your business and employees’ status.
- Share your plan with employees and clearly communicate expectations. It can be a relief to employees when they know you have a plan for operating, reduced hours, return to work plans, etc.
Here are eight tips to protecting workers and customers:
- Actively encourage employees who are sick to stay home.
- Encourage workers and customers to wear face masks. To reduce the spread of COVID-19, the CDC recommends people wear cloth face coverings in public settings when they are around people from outside of their household, especially when other social distancing measures are difficult to maintain. Beginning June 18, 2020, wearing a mask that covers your nose and mouth was required statewide in California, as ordered by Gov. Gavin Newsom.
- Promote etiquette for coughing and sneezing as well as handwashing. Provide tissues, no-touch trashcans, soap and water, and hand sanitizer (with at least 60% alcohol) to employees.
- Perform routine environmental cleaning of frequently touch surfaces (workstations, counter tops, handrails, doorknobs, exit bars, etc. Discourage the sharing of tools and equipment, where possible.
- Deliver education and training materials – like fact sheets and posters.
- Have conversations with employees about their concerns. Some employees may be at higher risk for COVID-19 because of their age or health, or because of those with whom they live. Link here to visit the CDC website, which offers guidance for older adults.
- Talk with vendors, suppliers, and others about their plans – and requirements your company is implementing that could affect their services to your business.
- Implement practices to minimize face-to-face contact between employees, to adhere to state or local health department guidance on social distancing.
- Implement changes in the layout of your business to ensure workers and customers can remain at least six feet apart. The CDC offers a variety of additional guidance to different types of businesses, such as grocers, bars, restaurants, pharmacies, banks, and others. Link here for answers to frequently asked questions, or use the site’s search function.
- Post signs in high traffic and highly visible locations (like entrances, exits, restrooms) that promote everyday protective measures to stop the spread. Link here for the CDC’s general public toolkit.
The state of California has its own coronavirus website (www.covid19.ca.gov) with resources to help employers, residents, and visitors stay up to date on the latest information concerning the spread of COVID-19, county information, testing and treatment, and guidance for nearly 30 specific industries.