Employer Protection for Group Health Care Plans in California:

As a small business operating in California, you need to be aware of your protections under the law when you are purchasing your group health care plan. It is also helpful to understand what an insurance company can and cannot do once you and your employees are covered by the plan.

Let's look at some common issues facing small businesses in California and what they can expect in the way of protection with group health insurance.

1. Is an insurance company required to sell me a policy? In the past, small business owners found that many health insurance companies were turning them down for coverage, simply because providing a group health plan for a small business is riskier than it is for a larger business. This is no longer acceptable in California and the majority of insurance companies are now required to provide group health insurance to small businesses.

This is called "guaranteed issue." As long as you employ at least 2 people and less than 50 people, you cannot be turned down for a group health insurance policy.

2. Will an insurance company require a minimum number of my employees to join the plan? Yes. Because it is riskier for an insurance company to ensure a small business, many of them will require that a specific number of your employees join the plan.

You can narrow your risks as a small business owner by checking with your employees ahead of time to make sure that you will meet the minimum requirements. It is also a good idea to inform your employees that group health insurance providers may require a longer exclusion period for employees that join the plan late.

3. Can an insurance company cancel my plan? In California, a group health insurance provider may only cancel a policy if there has been fraud perpetrated by the employer or the employees or if you do not pay your monthly premiums. In the past, many insurance companies cancelled the group health policies for small businesses if one or more employees became sick with a serious illness, or if an employee's health care needs were to great. Now, it is illegal for an insurance company to do this.

4. Can a company charge me more because of my group's health status? Small businesses in California can be charged more for their premiums if an employee in the group has a serious illness. However, there are limits as to how much the insurance company can charge you.

You cannot use this as a reason to deny one of your employees health care, nor can you use this reason not to hire an employee for your company.

5. Can a company charge me more because of where my business is located? In California, location is one of the allowable determining factors for setting the price for a group health care plan. If your business is located in a specific area that has been deemed as a "risk" you may end up paying higher premiums.

6. Does the insurance company have to renew my group health plan? Yes, in California, an insurance company is not allowed to deny renewal of a policy as long as the premiums have been paid and there has not been any fraud associated with the policy. There is also a limit as to how much your rates can go up with this renewal.

7. Is an insurance company required to provide me with all of their plans, or only a select batch of group health care plans. Yes, a company selling group health insurance to a company in California must provide that company with information on all of their available group health plans. This cuts down on insurance companies tricking small business owners into paying more for a policy than necessary.

8. What should I do if an insurance company does not follow these rules? There are state regulators in California that monitor and collect documentation from insurance companies doing business in the state. There are serious fines for health insurance companies who do not follow these regulations and it is important to report a company that breaks the law.

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