How to Determine Which Employees are Eligible for Group Coverage and What it Covers

Monday, March 4, 2024 16:51 Posted by Admin

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.

Which Employees are Eligible for Group Health Insurance?

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.

Who is Not Eligible for Group Health Insurance?

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:

• Employees covered under a collective bargaining agreement may not be eligible for your group health insurance policy, particularly if their agreement provides coverage through a different plan.
• Independent contractors or freelancers that may perform work for your company are not eligible to participate in your group health plan.
• Retired or former employees are not eligible.
• Temporary employees or those who have not yet completed any probationary periods required by corporate policies may not be eligible.
• Non-employee directors or consultants are not eligible.
• Part-time employees who work less than 30 hours per week may not be eligible based on your company benefits policy.

What are Dependents and How do you Determine Eligibility?

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:

Dependents

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.

• Domestic Partner: A long-term living arrangement with another adult without a legal marriage. Employers may choose to extend spousal eligibility to domestic partners. Policies should be specific, indicating whether this applies to same-sex domestic partners, opposite-sex domestic partners, or both.
• Alternative Coverage Clause: If a spouse or domestic partner is employed full-time and has access to reasonably-priced insurance through that employer, they may not be eligible for coverage as a spouse on your plan.

What Group Health Insurance Covers

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:

• Primary Care Visits
• Specialty Care Visits
• Urgent Care
• Emergency Care
• Hospitalization
• Surgical Interventions
• Diagnostics
• Preventative Care
• Maternity Care
• Mental Health Care

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.

• Deductible: The amount that the insured pays before the plan kicks in.
• Co-Pay: A fixed amount that the insured pays for designated services.
• Co-Insurance: The percentage of expenses that the insured pays after the deductible is met.

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 Takeaway on Group Insurance Eligibility

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.