Insurance

Laws Related to Health Insurance | Health Coverage Guide by Small Business Majority

(This site is not intended as legal advice. You should not act on the information contained in this site without consulting an attorney.)

As of 2014, the Affordable Care Act requires everyone to have health insurance or pay a penalty. however, under the new law, businesses with fewer than 50 full-time equivalent employees are not required to provide insurance to their employees. if it offers health care coverage, it will be subject to state and federal regulations. this site provides an overview of the most important regulations.

Reading: What type of health insurance is required by law

The laws that apply to your business depend on how many employees you have and the type of coverage you provide.

Patient Protection and Affordable Care Act

type of law: federal.

who is affected: all employer and employee individuals and groups, whether currently covered, seeking coverage, or previously uninterested in coverage.

what it does: Fully effective in 2014, the Affordable Care Act requires everyone to have health insurance or pay a penalty. however, businesses with fewer than 50 full-time equivalent employees are not required to provide insurance under the new law. Employers with 50 or more employees are subject to different regulations, some of which are discussed on this site. The law also makes important changes to control the cost of health insurance and offers tax credits to small employers to offset their health care costs. Since the ACA passed in 2010, some states have passed various laws to match the federal law.

key provisions include:

  • shared responsibility requirement: Businesses with 50 or more employees must offer their employees health insurance or pay a penalty.
  • insurance markets Physicians : States should establish online marketplaces, also called health insurance exchanges, that will allow small businesses and individuals to pool their purchasing power and purchase health insurance.
  • tax credits: small business health care tax credits are offered under the law to help offset the cost of insurance. these tax credits have been available since tax year 2010. to qualify for a tax credit of up to 35% now and 50% in 2014 through the exchange, small business owners must pay at least half the premiums of employee health care and have 25 or fewer full-time equivalent employees earning an average of $50,000 or less per year.
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for complete information on the law, visit the “affordable care law” in the toolbox.

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Type of law: Cobra is a federal law.

who is affected: employers that offer group health coverage.

what it does: Upon termination, or under certain other circumstances, an employee may be eligible for continued health care benefits recognized under federal law, called cobra. Under federal law, an employer typically must employ more than 20 employees (both full-time and part-time employees count) to be subject to the Cobra requirements. Also under federal law, an employee has 60 days after notification of his or her rights to register.

The longest possible period during which cobra continuation coverage must be provided is called the maximum coverage period. There are three maximum coverage periods, as described below:

  • 36 months: Continuous medical coverage must be offered for a period of 36 months for the spouses or covered dependent children of an employee in the event of:
    • the death of the covered employee;
    • divorce or separation of the covered employee and spouse;
    • the covered employee becomes eligible for medicare; or
    • a covered dependent child who ceases to be a dependent child under plan provisions (for example, when a child reaches the age of majority).
    • the covered employee is terminated (for reasons other than the employee’s gross misconduct); or
    • the covered employee experiences a loss of coverage under the employer’s group health plan due to a reduction in hours worked.

    Events That Limit Duration of Coverage: Cobra continuation coverage ends when the qualified beneficiary becomes covered under another group health plan as a result of employment, reemployment, or remarriage , as long as the other plan does not. not exclude a beneficiary’s pre-existing condition. (In 2014, under the Affordable Care Act, pre-existing condition exclusions will no longer apply.) additionally, it is not necessary to provide continuation coverage after:

    • failing to make timely premium payments under the plan;
    • qualified beneficiary enrolls in medicare after electing cobra; or
    • the employer stops maintaining any group health plan.

    Premium Charged for Continuation of Coverage: The plan may require payment of a premium for continuation of coverage. however, the premium may not exceed 102% for the applicable premium charge coverage that would have been paid by the employer and employee had the qualifying event not occurred. Please note, however, that for employees entitled to a disability extension of the maximum period of coverage, an employer may charge a premium of up to 150 percent of the applicable premium.

    What You Must Do: Employers must offer continuation coverage with benefits that are identical to the coverage provided under the plan to similarly situated beneficiaries who are still plan participants. A group health plan is required to provide an initial billing notice to each covered employee and spouse at the time they are first covered by the group health plan. within 30 days of the date a covered employee dies, is laid off, has a reduction in hours, or becomes entitled to medicare benefits, the employer must notify the plan administrator and, within 14 days, the administrator must inform qualified beneficiaries of their rights to continuation coverage and provide a collect election form. each qualified beneficiary has 60 days after receiving the notice to elect the coverage collects.

    Similarly, a covered employee, spouse or dependent must notify the plan administrator in the event of a divorce or legal separation, or a dependent child ceasing to be a dependent under the plan, within 60 days. following notification of a child’s divorce, legal separation, or loss of dependent status, the plan administrator must, in turn, notify qualified beneficiaries of the right to elect continuation coverage within 14 days. in addition, qualified beneficiaries who are disabled at the time of the qualifying event must notify the plan administrator of the disability (within 60 days of the date of the disability determination by the social security administration); and when the beneficiary is no longer disabled (within 30 days of final determination of non-disability).

    Employee Retirement Income Security Act of 1974 (ERISA)

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    type of law: federal.

    who is affected: all employers or private sector sponsors (such as trusts or labor associations) that provide group health benefits, whether through the purchase of insurance or otherwise . Health benefit plans offered by state and local governments or churches are not subject to ERISA.

    what it does: erisa governs many aspects of the employee benefit plan, including how employers must provide plan information to employees. erisa also governs the claims and appeals procedures for qualified plans.

    What you must do: You must provide all covered employees with a summary plan description that describes the plan in understandable terms, how benefits are paid, when benefits are not paid, and rights of the employees. and responsibilities must also provide notice to all employees when you make a material change to your plan. this notice is called the summary of material changes.

    health insurance portability and accountability act (hipaa)

    type of law: federal

    Who is affected: Federal law governs employers with two or more employees.

    what it does: hipaa allows employees to obtain health insurance when they lose their group health insurance or change jobs, even if they have a pre-existing health condition. If an employee qualifies, they cannot be denied insurance based on her medical history.

    What to do: If your health plan has a pre-existing condition clause, make sure new hires provide evidence of creditable coverage, also known as a HIPAA certificate. Evidence of Creditable Coverage is generally a letter that describes how long the employee has previously been covered. You must notify the new participant of the duration of any applicable pre-existing condition exclusion after creditable coverage is taken into account. (In 2014, under affordable care, insurers will no longer be able to deny a person coverage based on a pre-existing condition, health status, or claims history.) to the former participant.

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