Carrier News

BCBS: Clarification on Small Group Determination

BCBS changed how they determine if a group is eligible for small group coverage. The change applies to groups effective on/after Jan 1, 2016. In order for a group owned by a husband and wife to be eligible as a small employer, they must employ an average of at least one “employee” in 2015. Texas state law requires carriers to renew groups that no longer meet the carriers’ eligibility requirements for new business. Group size is not a valid basis for non-renewal in Texas.

The text of this article was extracted from an email BCBS sent to brokers on Nov 16:

On Oct 7, 2015, the Protecting Affordable Coverage for Employees Act (PACE Act) was enacted as Public Law 114-60. The PACE Act revises the definition of small employer. Generally, a small employer is defined as an employer who employed an average of 1-50 employees on business days during the preceding calendar year, and employs at least one employee on the first day of the plan year.

To correctly identify an employer’s size for the purpose of determining a group’s market segment, please refer to the following guidelines:

  1. An employee is any individual employed by the employer. This includes full-time, part-time and seasonal employees.
  2. An independent contractor is not an employee and is not included in the count of “employees.” Whether an individual providing services for your business is an “independent contractor” (1099/Contractor) or an “employee” is a facts and circumstances determination. It requires the consideration of several factors including whether the business has the right to control what the worker does or how the worker does his or her job, how the worker is paid, and who provides the tools or supplies for the work being done.
  3. If you determine that an individual is not an employee, but rather an independent contractor, do not include that individual in your count of “employees.”
  4. Individuals treated as a single employer under the Internal Revenue Code Section 414(b), (c), (m) or (o), should be treated as a single employer. [Read: Employees of companies that are related by common control, ownership, or affiliation should be counted together.] This IRS manual provides an in depth analysis of these rules.
  5. If a company/employer is wholly owned by an individual (or an individual and his/her spouse), the individual or spouse should not be included in the employer size count.
  6. Partners in a partnership should not be included in the number of employees reported. While partners in a partnership should not be included in the number of “employees” reported, a partnership may establish a group health plan that provides coverage to partners and/or their dependents. Partnerships must be filed with the state and recognized as a legal partnership under the laws of the state in which they do business.

If a company existed during the preceding calendar year and the average number of employees employed on business days during the calendar year preceding the effective date of coverage is one or more, the employer is considered eligible for group coverage.

Employers not in existence during the preceding calendar year must reasonably expect to employ one more employees on business days in the current calendar year to be considered eligible for group coverage.

via BCBS’s News for the Blues for Producers on Nov 19, 2015

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