Global Courant
Finding the right group health plan for your business can be downright intimidating: digging through lists of insurance companies and plans; checking and rechecking the dollars and totals for deductibles and co-pays; understand plan limitations and exclusions; deciphering the insurance language from a dictionary. It’s enough to make anyone feel like a college freshman again.
Texas insurance law allows for a wide variety of health care coverage plans and packages. All group health plans have their limitations, and finding the right employee health plan at the right price can be a challenge.
In Texas, the term “small employer” is a special insurance designation reserved for businesses with two to fifty eligible employees. The law provides these companies with a number of additional protections, including a 15 percent annual limit on rate increases due to health factors, a state-enforced guarantee that carriers cannot arbitrarily discontinue coverage, and a cooperative purchasing facility that allows small employers to pool their purchasing power to negotiate lower rates.
For small business employees in Dallas, Houston and throughout Texas, the law provides several ways to retain benefits after leaving a job and limits the wait time before pre-existing conditions are covered.
Aside from these requirements, small employer carriers can offer a wide variety of plans, with virtually any combination of features and benefits.
Eligibility for small business coverage
Texas businesses with two to 50 eligible employees can get small employer coverage from a traditional insurance company or a health maintenance organization (HMO). Eligible employees are defined as those who usually work at least 30 hours per week; are not classified as temporary, part-time or seasonal; and are not already covered by another collective health plan. The owners of a company count towards the employee total.
The number of eligible employees — not the total number of employees — determines whether a business is considered a small employer under Texas insurance law. For example, if your company has a total of 60 employees, it may still qualify if six of the employees work part-time and four are covered through another source, such as an affiliate plan.
If you decide to offer your employees a collective health plan, you must make it equally available to all of your eligible employees and their dependents.
Coverage is available under small employer health insurance if at least 75 percent of a small employer’s eligible employees choose to be covered. Carriers must always “round up” when calculating the percentage. For example, a five-person business with only three employees willing to participate meets a 75 percent requirement by rounding up.
However, in the case of a company with only two eligible employees, the law requires 100 percent participation. A husband and wife working in a company should be counted as two separate employees. Neither employee is eligible for coverage as a dependent of the other.
If you provide a health plan, state regulations and a federal law called COBRA (Consolidated Omnibus Budget Reconciliation Act) allow employees to retain benefits for a period of time after job separation. It is your legal responsibility to inform employees of their rights to continue coverage. Former employees who choose to continue their coverage through COBRA or state continuation must pay the full cost of the plan. You are under no obligation to contribute to their premiums, even if you have previously paid for a share. Ask your carrier for more information about your responsibilities to former employees.
Types of plans offered
Health plans are classified as “state-mandated plans” or “consumer choice plans.” A state-mandated plan provides certain required minimum features and coverages. A consumer choice plan is any plan developed by a carrier that excludes certain state-mandated benefits. In general, consumer choice plans that don’t include all state-mandated coverages will save you money on your monthly premium.
While Consumer Choice plans are sometimes referred to as “standard plans,” be careful not to interpret the term as meaning that the coverages offered are “standardized.” Each carrier’s Consumer Choice plan may differ and a carrier may offer different Consumer Choice plans.
Some state-mandated benefits continue to be required for consumer choice plans, including coverages for:
*Phenylketonuria treatment, if prescription drugs are covered.
* Complications of pregnancy.
*Minimum postpartum hospitalization (federally mandated).
* Reconstruction surgery after a mastectomy (federally required).
Consumer Choice plans can vary depending on the type of carrier offering the plan. For example, HMO consumer choice plans must pay for 20 outpatient mental health visits per enrollee per year, but that is not a requirement in indemnity plans. In addition, unlike insurance companies, HMO consumer choice plans must include basic health care services such as inpatient, outpatient, and preventative services. Carriers may offer optional benefits that vary widely from plan to plan.
You don’t have time for all this research and calculations. But can you really afford to leave it on your “maybe someday” list? As the cost of medical care rises, the risks of not having health insurance are more apparent than ever. Today, a single injury or illness — if left uninsured — can throw a family into financial ruin. In addition, health insurance is an important benefit of employment. You may not be able to hire and retain the best employees without offering it.
Another alternative to group health insurance, which can be prohibitively expensive for many small businesses, is offering individual health insurance plans to your employees. By law, an employer cannot contribute to these plans, or that would be treated as group insurance under Texas state law. But you can still help your employees get into a good plan and improve their health and well-being while also improving employee retention. If you are a small business owner and want to provide affordable health insurance to your employees but can’t afford group health insurance, consider offering your employees the revolutionary, comprehensive individual health insurance solutions developed by Precedent specifically for young people. , healthy individuals.
Precedent offers affordable individual health plans with catastrophic coverage but no high deductibles, and we offer these plans to your employees at a discount. For more information, visit us at our website, ( We offer a unique and innovative suite of individual health insurance solutions, including highly competitive HSA-qualified plans, and an unparalleled “real time” application and underwriting experience.
Texas Small Business Health Insurance Fundamentals
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