Benefit plans that provide for health and other benefits are controlled by legislation stemming from the Departments of Labor and Treasury along with state regulations under the Colorado Revised Statutes. As a small business employer, the plans you choose should meet all applicable state and federal guidelines for compliance as "welfare benefit plans". For purposes of this article, the rules in Colorado as they apply to groups of 2 - 50 employees will be used.

An employer in Colorado, if offering or sponsoring an employee health plan, must choose group coverage. Since maternity is required for ALL small employer groups in Colorado, you cannot offer individual plans which do not have a state-approved maternity benefit. There is a tremendous amount of misconception and outright dishonesty about this issue.

Businesses in Colorado with 2 -50 employees may choose from any group medical plan made available by any insurer without proof of medical insurability. Under all of these plans, your rates for coverage may be based on a limited number of factors, such as location, industry, and the health of your employees, for example. Industry ratings, or rate-ups on renewal based on your occupation or industry, are allowed under state law, amended in 2003. Increases for these factors, including health status of your employees, can be up to 35% if the employer has not maintained continuous coverage. Premiums can be discounted, based on ratings factors, below the index rate.

In choosing group coverage, you have options and choices available. You may:

• set the waiting period
• the amount of the employer contribution
• the plan type, options, and other selected benefits
• the open enrollment period, 24 hour coverage, and other provisions that are allowable.

If the plan allows you to 'self-insure' for maternity, you may do so, with the understanding that all small groups in Colorado with more than 15 full and part-time employees must fully-insure for that benefit.

You may be able to:

• discriminate between classes of employees
• and to deny access to various employee classes, such as part-time, seasonal, etc., from your health plan.

You will be expected to:

• meet and maintain a minimum employee participation level
• notify, enroll, or waive all new employees according to the rules and waiting periods that you have set up
• pay all premiums in a timely manner, and, in the event of a lapse of coverage, be expected to pay for employee medical expenses for which you collected premiums, whether the policy was reinstated with a lapse or not.
• comply with any audit requirements to ensure compliance with participation and employer requirements, or risk losing coverage
• make an Initial Notice of COBRA rights available to all employees
• Provide for COBRA or state continuation to all terminated Qualified Beneficiaries
• forward premium payments from terminated employees forward to the insurer or health plan.

Employee rates for coverage, depending on the health plan, can either be age-based or composite (an average of all ages in your group). Generally, health plans offer composite rates if you have more than 10 employees. All initial rates, barring unforeseen circumstances such as an emergency filing for rate relief with the State of Colorado, are guaranteed for 12 months (renewal month). Employees under age-based rates who move from one five year rate band to another within this 12 month rate guarantee may have a premium increase based on this age change even within the guarantee period. Maternity coverage is applicable to all employees, regardless of gender or age. Under federal rules, maternity is no longer a preexisting condition. Renewal rates may take into account the health status and claims history of your employees.

Health insurance renews on a month-to-month basis in Colorado; you need to notify your insurer or health plan a minimum of thirty days PRIOR to your termination of coverage, in writing. An insurer or health plan cannot deny you renewal of your coverage for any claims-related reason, barring fraud or misrepresentation.

Employer groups who have more than 50% of their employees out-of-state may face difficulty in getting coverage, as may employers who have 1099 employees, passive investors in need of coverage, or employers in passive industries, such as oil & gas partnerships and other tax shelters. There may also be limitations on husband wife partnerships.

Life Insurance, disability coverage, dental insurance, and other forms of insured benefits are not generally guaranteed issue and require underwriting. Plans of this nature can be declined for any number or reasons, including pre-existing conditions, occupational code or industry, time in business and other considerations.

• Return to Insurance 101.
• For information on COBRA and continuation coverage regulations, click here.

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