It is becoming increasingly common for California small companies to have employees outside the State. As state lines blur and offices or off-site employees continue to trend upwards, providing benefits for all employees, including those outside the State is becoming an important consideration. There are even many areas along the California border where being across State-line might be a matter of miles for some employees. These areas will continue to grow as California does.
Small Group health coverage qualification with Out of State employees
The main requirement by State Law is that in order for group health plans to be Guaranteed issue according to AB 1672, is that the majority (51%) of all eligible employees must be employed in the state of California. Residents of Hawaii are not eligible. If this is an issue, it probably makes sense to look at the State where the majority of employees reside to establish a group plan with carriers in that State. Keep in mind that a carrier looks at the DE6 or Quarterly payroll report to determine group eligibility according to payroll.
Group insurance networks and out-of-State employees
Choice of plans and/or doctors is probably the most important consideration when covering employees out of the State. PPO Plans are easier to work with for out of state employees; however the HMO’s are getting more established Out of State and becoming better to work with.
How rates are determined for out of State employees
Health insurance is primarily driven by area and age with age having the largest impact. Area, however, can swing rates quite a bit as each region's underlying health care costs differ. Each carrier will establish rating area's which typically fall along county lines. If an employee lives outside California, most carriers apply the actual company's region as the default rating area for those employees. Some carriers apply a separate out of State rating which tends to be more expensive...sometimes much more expensive.
Spectrum Benefits Group has over 15 years of experience with companies that have Out of State Employees. Our experience and knowledge is a vital factor when determining the best company to handle your insurance benefits.