Once you’ve made the decision to offer group health insurance to your employees—either to satisfy a mandate or to boost your competitiveness in attracting talent, it’s time to start shopping. About half of the total US population is covered by group health insurance through employers, so you’re in good company. You should put together a benefits policy early on that identifies in writing who is—and is not eligible for group coverage.
While you may have control over certain eligibility decisions, proceed with caution. Your benefits policies should be designed to promote fairness. Any indication of bias or favoritism can land your company in hot water.
An employer may choose to cover any employee on their payroll, but most choose to restrict these benefits to full-time employees that have met certain criteria like completion of a probationary period. However, if an employer offers insurance benefits to one full-time employee, they must offer the same benefits to all full-time employees.
The IRS defines a full-time employee as anyone who works an average of 30 hours or more per week. This is the definition that the Affordable Care Act will use so employers who are subject to mandated insurance coverage should align their benefits policies to this definition of a full-time employee.
Your company may employ a variety of different types of people. Not everyone fits the definition of a full-time employee, even if they meet the hourly requirement. Let’s take a look:
In addition to your full-time employees, group coverage eligibility typically extends to their dependents (or immediate family members) with some caveats. A company generally must offer dependent eligibility in order to satisfy ACA. However, some smaller companies may not be able to secure low enough rates to make dependent coverage feasible. Here’s a closer look at the ins and outs:
The biological and adopted children of an eligible employee should be covered through age 26, according to the ACA. However, employers have some freedom in defining a dependent child to include stepchildren without requiring adoption or to extend the age beyond 26.
Spouse or Domestic Partners
The legal married spouse should be considered eligible in most cases. However, some states may not recognize same-sex marriages and in some cases, employers use an alternative insurance clause to deter spousal coverage.
Group health insurance is intended to cover eligible medical expenses for the employees of an organization and their dependents. Coverage limits vary by policy, but a typical group health insurance policy covers:
These policies don’t pay the full cost of these services. Instead, each policy defines a deductible, co-pay, and co-insurance amount that splits cost between the insured and the insurer.
Additionally, some plans offer supplemental coverage for other services like dental care, vision, and prescriptions. If not, the employer usually secures supplemental coverage through other providers in order to offer a complete benefits package to their employees.
The bottom line is that group health insurance is typically reserved for regular, full-time employees and their dependents. Any coverage extended to part-time workers or non-traditional dependents is solely at the discretion of the employer. The only requirement is that the employer must provide the same options to all employees that meet the same criteria. This coverage, which is mandated by the ACA in most cases, covers typical medical expenses for doctors visits and required care.
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