Guide to having a Group Plan for Companies

There are questions concerning group plans that I am always asked. Below are questions and answers that will provide guidance.

 

Q. How many employees does it take to have a group plan?

A. 2

 

Q. What documents does a carrier require to set up a group plan?

A. Last carrier invoice if applicable, most recently filed DOL-4 form, enrollment forms from all employees, waivers from those on their spouse or another group plan, or an individual plan a check for  the 1st months premium.

 

Q. If I get a quote will the rates change after the enrollment?

A. Yes it could, if the final enrollment has different ages than originally quoted the rates could be higher or lower. Final rates are based on date of birth and zip code of employees and dependents.

 

Q. How many employees have to be enrolled?

A. The average carrier requires that 75% of eligible employees have to be enrolled. Those not counted as eligible are ones who are covered under their spouse’s group plan or ones who are covered under another group plan. These are not federal laws but the participation guidelines from the carriers.

 

Q. Why would an employer have a group plan as opposed to providing employees with individual plans?

A. Group plans are tax deductible to an employer and not taxable to an employee. In 2012 the premiums the employer contributed were on W-2’s but not taxable. Makes you wonder about the future! Coverage is guaranteed issue for current and future employees.

 

Q. Is there anything an employer can do to ease the burden for employees?

A. Yes, you can set up a POP plan. That stands for premium only plan. With the proposer documents you can take premiums for the employees share before taxes. Their premiums become a reduction in salary as opposed to a deduction after taxes. The reduction is nontaxable thus saving taxes on the premium reduction.

 

Q. Is there a waiting period for pre-existing conditions?

A. It depends on the contract with the carrier. Some carriers don’t have a pre-existing clause as long as you stay in the network. If you had prior coverage the length of time you were on the coverage transfers toward your waiting period. If your prior coverage did not have a pre-ex clause your new coverage won’t either. Carriers by law have to provide you with a letter of credible coverage which you send to your new carrier.

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