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Arizona Small Business Health Insurance

In Arizona, small business owners are not required to offer group health insurance to their employees. A small employer is defined by Arizona as an employer who employees at least two but not more than 50 eligible employees on a typical business day during any one calendar year. If an employer does offer group health insurance, both state and federal rules and regulations apply, as well as requirements imposed by the individual insurance companies. The employer is responsible for establishing health insurance eligibility requirements for his group’s employees, however.

The insurance companies, in most cases, are required to offer you Arizona group health insurance on a guaranteed issue basis without regard to the health status of the group. This means that the insurance company may not exclude from coverage any employee or a spouse or a dependent child of an employee who meets the eligibility requirements. What it does mean is that the health insurance company or health plan may deny enrollment to an employee and his or her dependents if they reside outside the plan’s service area as long as they deny enrollment uniformly without regard to health factors.

Arizona Small Business Health Insurance Employee Eligibility Rules

Arizona employers are given flexibility in determining the number of hours worked per week for an employee to be considered full time and eligible for health insurance. The minimum requirement customarily established by insurance companies is 20 hours per week; therefore you can choose any hourly requirement between 20 and 40 hours. Employers are also given flexibility in determining a probationary period or waiting period for newly hired employees.

Arizona laws also require that employers meet minimum enrollment requirements or they risk having their policy canceled. In Arizona, health insurance companies can require that a certain number of eligible employees purchase the Arizona small business health insurance policy. Arizona Health insurance companies can also require that the employer contributes a specific amount toward his or her employee’s premiums.

In addition to the number of employees enrolled, insurance companies usually require that at least 75% of the eligible employees of a small employer enroll in the group plan and at least 25% of eligible dependents enroll in the plan where the employee is contributing a portion of the premium for coverage. If the employer pays 100% of the premium, then 100% of the eligible employees must enroll. The same rule applies to dependent coverage if the employer pays the full premium. Employees having other verifiable medical coverage on their own or coverage provided by a government program are not normally included in the total number of employees when applying these percentages.

Arizona Small Business Health Insurance Employer Contribution Requirements

Insurance company rules will also specify the minimum contribution an employer has to make toward an employee’s health insurance premium. Employers are generally required to contribute at least 50% of the employee’s portion of the premium but they are not required to contribute toward that portion of the premium attributed to the employee’s dependent coverage. Arizona employers can choose to pay more and even cover all or part of the coverage for an employee’s dependents if they wish. If your employer pays 100% of the premium he or she is not required to contribute to the cost for covering dependents on the health plan. Employers may also establish classes of employees and have different contribution levels for each class, so long as they clearly define each class and treat all members of a class in an equal manner.

The amount that Arizona health insurance companies can charge for Arizona small business health insurance can increase on the basis of the group’s health status, age, and gender. However, there are limits to how much more the Arizona insurance company can charge because of these situations. For employees, the price of small business health insurance varies depending on how much of the premium your employer pays. Once a policy is instated, however, it is illegal for Arizona health insurance companies to cancel an existing Arizona small business health insurance policy on the basis of illness.

Employers are not required by Arizona law to offer small business health insurance. If they do choose to offer it there are different eligibility requirements they may instate (such as hours worked). Insurance companies can also instate requirements such as a minimum enrollment. Once the requirements have been met, the health insurance policy may not be canceled due to the poor health of any of the group members.

Arizona Small Business Health Insurance Options: Individual Health vs. Group Health

Everything else being equal an Arizona group health insurance plan will be approximately twice the cost of a similar Arizona individual health insurance plan. The biggest reason for this difference in price is that as mentioned above; insurance companies must accept everyone onto the group health plan regardless of health issues while on the individual side there is no such requirement.

Many Arizona small businesses do very well to consider instituting a medical reimbursement plan where the employees purchases the much cheaper AZ individual health insurance plans instead of having a group plan and the employer still gets to enjoy the tax benefits of providing employee health insurance benefits. This type of plan is also known as a health reimbursement arrangement (HRA) in addition to the more common title of medical reimbursement plan.

Speak with a CPA or experienced health insurance agent for more information on setting this plan up and enjoying the lower monthly premiums and tax benefits (one caveat to note is that the employees must be somewhat healthy in order to be approved for an individual health insurance plan in AZ – unless they qualify for a guaranteed issue Arizona HIPAA health insurance plan).

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Take a few moments and compare the top insurance companies and plans offering health insurance coverage in your area of Arizona. Compare both individual and group rates side by side to find the best value. Get a free Arizona health insurance quote comparison now!

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