As an employer in Colorado, you want to help your employees look after their health. But when it’s time to make those important health insurance decisions, you likely have plenty of questions and concerns about your choices.
In this five-part series, we’ll help you navigate the complex world of group health insurance. If you have questions as you follow along, don’t hesitate to reach out to our knowledgeable team. Call us at 800-453-2981, option 3.
Here’s what our Group Health Insurance Series will cover:
Part 1: What is Group Health Insurance?
Part 2: How Much Does Group Health Insurance Cost?
Part 3: Understanding the Differences Between PPOs and HMOs
Part 4: What Employers Need to Know About the Affordable Care Act
Part 5: Health Insurance: Looking Ahead
Group health insurance plans refer to one policy issued to an entire group. The health plans under that policy are offered to eligible employees and sometimes their dependents, depending on the eligibility criteria defined by the employer.
Current federal law, the Affordable Care Act (ACA), calls employers with 50 or more full-time employees (or an equivalent combination of full-time and part-time employees) “Applicable Large Employers” and requires them to offer coverage or face financial penalties.
The plans available to you and how the cost of your plan is calculated depends on if the state of Colorado considers you a large or a small group. Note, this is different from the ACA definition of “Applicable Large Employers.”
For health insurance rating and plan design purposes, Colorado employers with fewer than 100 full-time employees are considered small businesses. Large employer groups are those with 100 or more full-time employees.
Both Colorado and the ACA define a full-time employee as someone who works an average of at least 30 hours per week. But to determine if you are small group or an Applicable Large Employer, you calculate the “full-time equivalents” which takes all part-time employees into account. Remember, this is a count of all employees to determine your group size. You may decide not to offer health care to part-timers, and some employees eligible for coverage may decide not to enroll, but to determine your group size, count every employee.
If you have part-time employees – those working an average of fewer than 30 hours per week – calculate the number of full-time equivalent employees by totaling the number of hours worked by your part-time employees during a given month and dividing that total by 120. Add the resulting number to the number of 30-plus hour employees to get the size of your workforce. You can also use this handy calculator tool.
If your business is associated with other entities – a parent company, subsidiaries, affiliated businesses – you’ll need to follow IRS rules to determine the number of full-time employees in your business. Your tax profession can help you unravel the rules and regulations that apply to your business.
The size of a group – large or small – determines how the group’s premium is calculated. Small group premiums (two to 100 employees) are established according to Colorado regulations that involve combining all of a carrier’s small group claim costs to create a “base rate.” Then, there are variations to that base rate to address the employer’s location, ages of the enrolled employees and dependents, and the health plan selected. The resulting premium can be billed in two different ways:
Large group health insurance plan pricing is based on risk factors for the whole group such as age and the group’s history of health care use.
Now that you understand the basics of group health insurance, read our next post: Part 2: How Much Does Group Health Insurance Cost?
Remember, reach our Employer Group team during business hours at 800-453-2981.