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What Does Guaranteed Issue Mean for Group Health Insurance in California



Health insurance loves it's obtuse terminology and guaranteed issue fits this bill.


You'll see it used as a benefit of having and offering Small Group health insurance in California.


What does it mean and what is needed to take advantage of Guaranteed Issue coverage?


Also, how has Health Reform affected this aspect of group health?


First some history.


In 1992, California passed AB 1672 which transformed the Small Group health insurance market in terms of qualifying for insurance, rates, and many other facets.


It really was the first "Exchange" and the major aspect of this was that groups and their employees could not be declined due to health if they met certain requirements of eligibility.


Furthermore, the carriers could not extend the rates more than 10% higher than the standard rate due to a company's specific health make-up and/or size.


This law extended these benefits down to groups with 2-50 employees. Qualified dependents are also guaranteed issue under an employee on a group health plan.


This is largely why dependent partners/spouses are more expensive on group plans than the employee (even if the same age).


You can always run your California Small Business quote here:


quote California employer health plan rates


Group versus Individual Before ACA Law


This aspect of guaranteed issue coverage for group health has always been the deciding advantage over individual family insurance in California since people can be declined in the latter due to health issues.


California companies could use this as a benefit to offer employees and officially, the State frowned on companies paying for individual plans to give to employees.


It would eventually pose a problem (and liability) to the employer when an employee would be declined individual coverage.


If they had a health issue, they could then go after the employer saying that they should have provided qualified "Guaranteed Issue" group health.


This was a benefit of group health.


ACA Law and Guaranteed Issue


Past tense.


Since Jan 1st, 2014, the individual family market is also guaranteed issue which means that some companies might pay their employees more and just send them to the Exchange to purchase their own individual coverage as they see fit.


There's much debate on what percentage of the group market (especially small group of 1-100 employees) will go this route.


As an employer, it's pretty hard to argue against stepping out from all the new mandated paperwork and headaches (SBS's with extreme penalties, etc) since the net effect will be the same to the employees providing that the employer pay them the same amount.


It was very interesting to watch.


In order to maintain the integrity of the market after adding guaranteed issue access, AB 1672 also added eligibility requirements that the employer or company had to meet.


Check out our very thorough guide to California group health insurance here.



Related Pages:


Group health changes in California

Request your Small Business Health Quote With Tax Credit Calculations