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Employer Group Coverage
Employer Group Coverage
Employers with 50 or more employees are required to provide health coverage to employees and their dependents. Failure to offer affordable coverage may subject an employer to a tax penalty and allow the employee to obtain a tax credit in the Health Insurance Marketplace.
Employers with fewer than 50 employees are not required to provide health coverage. However, if they choose to offer health coverage, they may be eligible for a small business health care tax credit.
What You Should Know
The Employer Is the Policyholder
The employer is the master policyholder and the employees are certificate holders in an employer group health plan. The master policyholder:
- Negotiates the terms of the group policy with the health insurer.
- May reduce or change the plan’s benefits.
- May increase the employees’ premium contribution.
- Is permitted to switch health insurers.
- May allow the employees to choose from more than one plan.
- Can stop providing coverage entirely.
Coverage and rates may change annually. The employee contribution - what you pay - is determined by your employer.
Employees should be aware of the employer’s group health coverage enrollment policies and deadlines. Employers can require up to a 90-day waiting period before new employees are eligible to enroll in coverage.
Employers have an annual open enrollment period for employees to apply, change, or disenroll in coverage. Any benefit changes or premium adjustments in the group plan are communicated to employees during the annual open enrollment period.
Special enrollment periods (SEPs) are allowed when certain life events occur (i.e., birth/adoption, marriage/divorce). Check with the employer's human resources department for more information about SEPs.
Benefits of Employer Group Health Plans
Employer group health plans typically offer:
- Limits on out-of-pocket maximums.
- No annual or lifetime dollar limits on essential health benefits.
- Free preventive services.
- Dependent coverage to age 26.
- Specific minimum benefits required by Michigan law.
More information regarding these requirements can be found under Required Coverage.
Small Business Requirement
Employers with 50 or fewer employees are not required to provide health coverage; however, they are required to provide information about the Marketplace to their employees, whether they offer health coverage or not. If they offer health coverage to their employees, they must offer it to all eligible employees within 90 days of their employment start date.
Small business employers can purchase small group health and dental plans from a licensed insurance agent or directly from an insurance company.
Employers may offer wellness plans to encourage employee participation in a healthy behavior, maintenance, or improvement program. If a health insurer bases their health insurance rates on tobacco use, they must offer a wellness program for any group policy. For participation in the wellness plan, the insurer may provide the employees with:
- A rebate or reduction in premium.
- A reduction in co-payments, co-insurance and deductibles.
- A combination of these incentives.
Self-Funded Health Plans
If you work for a large employer or a government agency, there is a good chance your health plan is self-funded or self-insured. Self-funded plans may work best for employers that are large enough to offer substantial coverage and pay expensive claims for medical services. As long as claims are being paid, you may not notice whether your employer has provided coverage through a self-funded plan.
Employers may contract with insurance companies and third-party administrators to manage a self-funded health plan.
DIFS does not have authority over employers or self-funded plans. DIFS may, however, have authority over the administrator of a self-funded plan. Self-funded plans fall under the authority of the United States Department of Labor’s Employee Benefit Security Administration. They can be reached at www.dol.gov/agencies/ebsa or at 866-444-3272.
Losing Employer Group Coverage
If you lose group health coverage through your employer, you may have federal COBRA* rights, be eligible for Medicaid or the Healthy Michigan Plan, or can purchase health insurance through a special enrollment period. For more information on your options, see Individual Coverage.
* COBRA - Consolidated Omnibus Reconciliation Act is a federal law that may give you the right to continue an employer group health plan on a temporary basis after you, your spouse, or your parent leaves an employer with 20 or more employees.