Employer FAQ

Employer FAQ - use the links below to go to the question that you are interested in.

Don't see your question here? Email us with your general small group benefits questions

(These answers specifically apply to the Colorado small group market only)

Am I required to offer health insurance...

I have employees with medical conditions...

I want to have a separate class of coverage for myself ...

Do I have to pay for all of my employees...

Can I pretax contributions...

Do I have to offer state continuation or COBRA...

I'm a small employer in Colorado. Am I required to offer health insurance? No, not yet! However, if you plan on attracting and retaining employees, or if you want to cover yourself, you should.

NOTE: Passage of health care reform legislation makes this an open question. I'll update this as more details emerge.Generally, employers with less than 50 employees are exempt from any coverage mandates, for now. Developing...

Q: I have employees with medical conditions and am worried about future cost increases based on claims. Is there anything I can do about this? In Colorado, with a recent change in small group regulations, employers can be rated up or down based on the medical conditions of their employees. While the issuance of the group plan is still guaranteed, the rates that are set for your health plan may vary, based on this information. The rates at renewal can also be affected by the medical history or claims of your employees. This may prove problematic for employers struggling to cope with HIPAA requirements! You may wish to contact us for further information. Also, employers who have not had prior group coverage may also be assessed an additional 35% over standard rates. And, lastly, you can't be subjected to rate increases above the maximum rate-up allowed by state regulation. See General Provisions for more information.

Q: I want to have a separate class of coverage for myself and the other owners, separate from my rank and file employees. Can this be done? Right now, depending on carrier, yes. There may be, however, tax implications that you should review with your tax advisor, especially if you are considered to be highly compensated. And, discrimination issues need to be avoided. Call us for a more specific answer, depending on your situation.

NOTE: Health care reform will have an impact on your ability to provide separate coverage for employees deemed to be in different classes. Developing...

Q: Do I have to pay for all of my employees, as well as there dependents? No. Carriers base the employer contribution on a minimum percentage of the total cost of the employee only, to prevent what is known as adverse selection. Some have a higher percentage than others. And, carriers will also expect a certain percentage of the eligible employees to enroll unless they have other allowable coverage. Dependent coverage is completely up to you in terms of employer contribution. You may contribute zero if you like. Remember however that if an employees cost of providing health care to their dependents is too high, they will opt-out, thereby potentially collapsing your plan.

Q: Can I pretax any employee contributions towards benefits? The answer is yes, as long as you have a Section 125 Plan (FSA), also known a a cafeteria plan, in place. Without it, you are in violation of the IRS Code. It is a good idea to install a Premium Only Plan under a Section 125 if you are providing health or other insured medical benefits to your employees, as this will reduce the employer taxes as well. Depending on what 'modules' of a Cafeteria plan would be beneficial to you, the cost can either be quite modest or substantially more. General, the tax savings derived from a Section 125 plan breaks even with 6 or more enrolling employees, depending on total setup cost.

Q: Do I have to offer state continuation or COBRA? While different rules apply to each, they do provide for, roughly, the same extension of benefits. State continuation has certain rules concerning length of employment, and time on the plan, before the employee is eligible for continuation. A different time period under state continuation rules applies for conversion privileges. COBRA, intended for employers who meet the Federal COBRA standard, provides for extension of benefits once an employee goes on the plan and has a qualifying event. Both types of situation require very specific notification requirements, and should not be left to chance. Using a competent administrator is a must; however, the employer is ultimately responsible for adequate notice of rights. New, more exact Notice requirements have been enacted by the Department of Labor and include The General Notice, Employer's Notice of Qualifying Event, Qualified Beneficiaries Notice Obligations, and Plan Adminstrators Notice Obligations. Please see COBRA and State Continuation for more information.

NOTE: IN Colorado, subsidies for COBRA and continuation, as written into federal law, are applicable to all small employer groups.

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