The employer application is one of the key documents needed to enroll in group health insurance in California. Sometimes called the "Master Contract", it establishes the contract between the employer and health insurance carrier. Some of the sections are basic in terms of what is needed while others reflect California's high level of legislation and regulation. Let's take a quick look at a sample Employer Application to help simplify it's completion.
The first section is where you list pertinent company information such as name, address, phone, etc. The carrier may also ask for the SIC code which is the federal code for your type of industry or business. You can find your company's SIC code with a simple look-up. You will also need to enter the type of company: Corporation, Partnership, Sole Proprietorship, or Other. LLC can be listed under other. Each type of company will have different documentation requirements. There may also be an area asking if you have been insured by the carrier for the past 12 months. They ask this question since you may have to wait 12 months before being able to come back on board if you cancelled coverage already under this same group.
There will be a section where you designate both
your plan choice and how much the company will pay
towards the premium. It is important to be sure
about this as it will likely hold at least 12
months. Changing plans can be difficult if not
impossible outside your anniversary date. Some
carriers such as Anthem Blue Cross offer Employee
Elect which allows you to offer the full suite of
health and dental plans to each employee and
designate your contribution based on a fixed amount
(say $100 monthly per employee) or a fixed
percentage (say 80% of any plan or 80% of a given
plan). The same contribution strategy must be
applied to each employee. You cannot discriminate
and offer better contributions to some employees and
not others. For AB 1672, or Guaranteed Issue group
coverage in California, the employer is required to
contribute at least 50% of the employee monthly
health premium. There is no requirement for
dependent coverage contribution. You can apply
different numbers to employee contribution and
dependent contribution (if at all for dependents).
If you choose the Employee Elect option, there is
usually an "All Plans" selection. We advise this
approach as it allows a great deal of flexibility
while allowing the company to control it's
The Group dental section works the same way and has the same 50% requirement mentioned above for health benefits. Group vision has the same 50% requirement but one vision benefit is usually chosen for the entire group.
Life Insurance varies depending on the carrier. There are required contribution levels (usually lower than the 50%) but you may also have schedules of benefits you can offer. For example, you may want to apply the same level of life insurance for all job titles of offer different life insurance levels by job type (say officers, managers, supervisors versus all other group members). You can also apply a certain amount times salary.
There may be an option for a P.O.P. or Premium Only Plan. This can be very advantageous when employees on salary will by paying part of their monthly premium (including dependents). Essentially, with a POP, the employees can pay their share of the premium pre-tax. This saves them income tax on their contribution and it saves the company payroll FICA tax on that amount. The employer's savings usually pays for the cost of the plan (runs around $120-150 annually) with some savings to spare depending on the amounts contributed by the employees.
This is actually the part of the Employer Application that can be more involved. Most of the work has to do with establishing if the group is eligible according to AB 1672. Essentially, we need to figure out:
Of the eligible people, we need at least 75% of them
to enroll on the plan. Employees on another group
plan can be waived from the eligibility pool. This
above calculation is the one that causes the most
issue for qualifying with Group health insurance.
You will also find questions that speak more to regulation at the Federal and State level. The questions regarding Cal-Cobra versus Cobra, Family Medical Leave Act, and TEFRA/DEFRA are all linked to the size of your company.
You will now deal with more general requirements/statements about your proposed small Company.
There may be a section to designate how ERISA looks at you. On the Blue Cross Employer Application, there is also a section to initial part of the contract regarding Rescission. Following, is the signature section for the Contract itself.
This form is used if your company had other Group health insurance (under this company) and there are employees on that Group plan through Cobra. The carrier will need this information as they do not show on the DE6 or payroll.
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|Employee Count||Under 25|
|Average Salary||less than $50K|
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