Group Healthcare Issues Affecting California's Small Businesses
Small businesses face many issues that are alien to larger companies, but group healthcare issues are often at the top of the list of troublesome challenges. Recent years have seen a tide of healthcare reform bills that fix a few loopholes and problems, but many of these serious issues have been resolved to provide employer protection for small businesses.
Common Problems Regarding Group Health Plans
Guaranteed Issue
Before California Law AB 1672,many small businesses had difficulty finding group health insurance. Insurance companies were not interested in selling plans to a small handful of employees; such a small investment of resources was not profitable. This meant that small businesses that employed fewer than 50 people had to pay exorbitant premiums to obtain even a basic healthcare policy.
With the new California laws, even businesses with as few two employees are guaranteed access to affordable group health plans. For freelancers and the self-employed, the law provides healthcare protection through professional associations and trade organizations.
Even though group health insurance is available to small businesses in California, insurance companies may still require a minimum number of participants. This greatly narrows down the healthcare choices for very small businesses that may not employee enough people to meet the insurance company’s quotas.
In addition, adding employees to a group health plan after the open enrollment period often results in long waiting periods and exclusionary periods. To get around this issue, small businesses are encouraged to inform employees of open enrollment time frames and follow-up with employees individually whenever possible. The more employees that sign up during the enrollment period, the lower the healthcare premiums; working together in this manner ensures that everyone benefits, including the insurance company.
Canceled!
Stricter healthcare laws in California now prohibit insurance companies from cancelling a policy due to illness, injury, or increased claims. Previously, small business employees lived in fear of losing coverage if another employee became ill and drew attention to the group plan. To avoid paying for the mounting healthcare costs of a sick enrollee, health insurance companies would often cancel the group plan all together. Thanks to lawmakers, this is now illegal in California.
Currently, health insurance carriers can only cancel a policy if insurance fraud is suspected or proven on behalf of an employee or employer. Additionally, failure to pay healthcare premiums may also result in cancellation of the group health plan.
Rising Premiums
Another common issue facing California’s small businesses is the cost of group health care plans. In years past, small businesses could be charged up to 2-3 times more for health insurance than larger corporations. The law has since placed cost caps on health insurance premiums. The monthly premiums will still be higher than those of larger companies, but they are affordable enough to make health insurance a realistic benefit for even the smallest of California businesses.
While insurance companies can still raise your premiums if one member of the group becomes ill, your policy can no longer be cancelled because of serious illness.
Guaranteed Renewal
Before the new healthcare reform laws, Californians lived in fear of losing health insurance every time the healthcare policy came up for renewal. Employees wondered if they would make they cut or be left health coverage suddenly.
Now, health insurance companies must honor a renewal request as long as the premiums are up to date. As long as both employer and employee pay their portions, he policy is renewed.
Slight of Hand
Have you ever seen a street performer, magician, or entertainer perform a slight of hand trick? How about an insurance agent? Previously, many insurance agents engaged in a slight of hand trick similar to Three Card Monte. They would present available health plans to the potential new policy holders, but then all but the chosen plan would mysteriously disappear, leaving the agent’s choice of plans left on the table while the others vanished into thin air.
Agents would either fail to mention all available policies, or downplay other policies while talking up the more expensive plan. Now, the law requires that insurance companies must make all available health plans equally accessible to any new customers.
These issues surrounding California small businesses and group healthcare no longer have such a profound impact, thanks to healthcare reform bills like California law AB 1672. While problems still exist, obtaining group healthcare in California is now fairer, easier, and more secure than in days past.