Hassle-Free Health Coverage: Small Employers

Small employers (usually defined as those with fewer than 20-25 employees) have been especially hard hit by increases in health care insurance premiums. Because many group plans are experience rated, small employers see an immediate premium increase whenever claims are particularly high. If the average age of the participants is particularly high, or if claims experience is high, or if there has been even one long or catastrophic illness in a small employer plan, it can have a devastating effect, making health insurance unaffordable for the whole group.

Recent surveys by the Health Insurance Association of America (HIAA) indicate a substantial decline in the number of small firms that are able to offer health coverage to their employees.

Several states have acted to ensure that health insurance coverages are available at a reasonable cost and under reasonable conditions for small employers. Among the new requirements:

- standard benefit plans that must be offered to small employers;

- maximum waiting periods for pre-existing conditions;

- the insurance company may not exclude particular individuals or medical conditions from coverage;

- insurance companies may only cancel small employer plans for nonpayment of premium, fraud, misrepresentation or noncompliance with plan provisions.