Individual and Family Health Insurance

PPOs - (Preferred Provider Organization)
A health care organization composed of physicians, hospitals, or other providers which provides health care services at a reduced fee. A PPO is similar to an HMO (Health Maintenance Organization), but care is paid for as it is received instead of in advance in the form of a scheduled fee. PPOs may also offer more flexibility by allowing for visits to out-of-network professionals at a greater expense to the policy holder. Visits within the network require only the payment of a small fee. There is often a deductible for major services.  A policy holder will have a primary physician within the network who will handle referrals to specialists that will be covered by the PPO, though it is advised that this be verified by the subscriber when making an appointment. After any visit, the policy holder must submit a claim (unless submitted by the provider's staff, which is typical these days).  The policy holder is responsible for co-payments and may also pay for the services if they haven't met their deductible or are subject to co-insurance.

HMOs - (Health Maintenance Organization)
A group of doctors and other medical professionals offer care through the HMO for a flat monthly rate with no (or small) deductibles and nominal co-payments. However, only visits to professionals within the HMO network are covered by the policy. All specialist visits, prescriptions and other care must be cleared by the HMO in order to be covered. A primary physician within the HMO handles referrals.

HSAs - (Health Savings Account)
The health savings account, or HSA, was created recently by federal legislation. There are two elements to an HSA, the HSA compatible health insurance plan and the HSA savings account.  An HSA lets you set aside pre-tax dollars for future medical or long-term care premium expenses.  The dollars in the HSA savings account can be invested by the owner.  The HSA bank selected by the HSA account owner has a list of investment options.  These funds are drawn upon for qualified medical expenses.  Unused funds roll over from year to year.

High-Deductible Heath Plan Requirements
To open an HSA, you must be enrolled in a HSA qualified high-deductible health plan, as defined by the US Treasury. For 2008, the minimum annual deductibles are $1,100 for a self-only plan and $2,200 for a family plan.

Small Group Health Insurance

Group Health Insurance for Sole Proprietorships

To set up a sole proprietorship and qualify for group health coverage, the business will need at least one active employee in addition to the owner. With a sole proprietorship an employee must appear on W-2 payroll reporting form DE-6 (filed with the State of California's Employment Development Department {EDD} each quarter). For many small businesses, this is a difficult hurdle to overcome. If the employee is actually a family member who is also going to be covered, it may make more sense setting up a partnership. In other cases, if payroll is not handled properly, or the sole proprietorship only uses 1099 independent contractors it will be difficult for the business entity to qualify for guaranteed issue group health insurance - consult your tax person or accountant.   You must have a properly filed DE-6 with a valid EDD number to qualify for small group health insurance as a sole proprietor.  A copy of the most recent quarterly certified DE-6 filing with the state showing the employee/s to be covered assists in establishing group health coverage. 

If you are a sole proprietor seeking group health coverage, contact us at Guarino Insurance to discuss your options in greater detail.

Group Health Insurance for Partnerships

Partnerships have several advantages over other business entities for the purposes of establishing group health insurance for their members. If you do not have another business entity already formed, a partnership is often the least expensive option. The expenses of forming a partnership will include, a city business license, setting up a business checking account, and getting a partnership agreement notarized.  All of these will generally cost less than $200 total to set up. Partnerships avoid the payroll and DE-6 requirements required of most other business entity forms. 

Many small businesses do not realize, as long as all parties to the partnership appear on all of the required supporting documentation, partnerships avoid having the expense of maintaining payroll, DE-6’s, and W-2’s.  A EIN number from the IRS is still required for a business entity seeking group health insurance.
One requirement of a partnership is that a notarized partnership agreement be on file.  Notarys are often located at a local retail postal store or copy center.

Besides a partnership agreement, a partnership will need a city business license with all partners to be insured listed. It is very important that ALL partners to be insured appear on the business license. Generally most partnerships have between 2-3 members. If your business is larger, either an LLC or Corporation may be a better business entity to establish for your group health coverage. Most cities charge a small fee of $50-$100 dollars to get a city business license for your business.

Lastly, a partnership needs to establish a business checking account and get business checks. The first month’s premium, payable to the insurer is required and must be drafted off the business check.

Group Health Insurance for Limited Liability Companies, LLC's

LLC’s can be formed easily through the California Secretary of State’s office. An LLC is usually more expensive to establish than a partnership or sole proprietorship. Also an LLC must pay an annual $800 dollar tax to the state of California to remain viable entities every year. This is a large expense to many of our smaller business clients.

Some groups may already have an existing LLC established. LLC’s do not usually have officers like corporations. Instead, they have members similar to partners in a partnership. For insurance purposes, it is best if all prospective insured’s appear as members on the LLC. If they do not, then they must be on W-2 payroll and the most recent calendar quarters DE-6 filing will be required to establish coverage. All employees to be covered on an LLC must appear on payroll.  Also, minimum participation requirements will apply.

If you do not already have your LLC established, there are some increased costs, and delays associated with establishing an LLC for insurance purposes. The Articles of organization showing all members, stamped and filed with the Secretary of State’s office must be submitted with the group health insurance application. It is not uncommon for new Limited Liability Company’s in California to wait for 2-6 weeks to get back a stamped copy of their filing back from the Secretary of States office!

Also, many businesses choose to form their LLC out of state to avoid paying the franchise tax board the $800 dollar annual tax. For example, you may have your LLC formed as a Delaware company. This adds an additional requirement imposed by the insurance carriers. If your LLC is organized in another state besides California, you must establish a California business address, and get a certificate of good standing from the California Secretary of State’s office before you can qualify for guaranteed issue group health insurance coverage. Again, as with many other transactions handled through the California Secretary of State’s office, to get the certificate of good standing can take as long as 6 weeks!

To cut down the processing time, there are now many 3rd party vendors available to "walk-in" requests to the Secretary of State’s office in Sacramento.

Minimum Participation Requirements for LLCs

A common complication with both LLC’s and corporations is when seeking coverage for the members of the LLC, and one or two employees, there is not have enough participation among all the employees to qualify. All insurers require a certain level of participation, and valid waivers for groups under 50 (fifty) employees. The best thing to do is to contact Guarino Insurance and speak with a licensed agent to determine if participation may be a concern for your business.  We can help you determine if your business entity will meet participation levels, and suggest strategies to reach the minimum acceptable participation levels as required by the insurers.

Group Health Insurance for Corporations

Corporations fall into two catagories, S-Corp's and C-Corps. Most small business prefer to avoid the double taxation of a C-Corp and take advantage of an S-Corp's tax liability pass through. For more information on which type of corporation will work best for your business, contact your accountant and attorney.

To qualify your corporation as a bonified group to purchase group health insurance you will need the "Statement of Information" from the state in which the corporation is established. If that state is not California, then you need a letter of good standing on file with the State of California's Secretary of State's Office. You will also need proof of payroll of any W-2 employees (reporting form DE-6). You will also need to complete a census of employees, their zip codes, and health insurance status (we can email a blank census form to complete).

For more information, and assistance on establishing group health insurance for your corporation, contact us at Guarinoinsurance.com. We work with companies of all sizes. Help reduce employee turnover through increased employee morale simply by adding a group health insurance plan as a benefit for your employees.