Medical insurance is among the most important forms of financial protection families and individuals can have. It guards against the high cost of sudden illness or ongoing medical treatment. While some people receive medical insurance at subsidized rates through their employers, the legal requirements for employers to offer medical insurance vary by state.
Offering Coverage
The requirements for employers to offer group plan health insurance are set by each state's department of health. Group health insurance costs less than an individual health plan for each employee because it allows the insurance company to distribute health risks across the entire group of workers. State requirements usually only apply to employers with a certain number of full-time workers. For example, in Massachusetts only employers with 11 or more full-time workers must provide group coverage. Small employers and sole proprietors have the option of providing medical insurance, and larger businesses may choose whether to offer any medical benefits to part-time workers.
Paying
The same laws that require certain employers to offer medical insurance also specify how much, if anything, employers must pay. As an example the Massachusetts law requires employers to make fair and reasonable contributions to paying for the medical insurance they provide. This still allows employers to use paycheck withholdings to fund the rest of the cost of group health insurance. Employers are eligible for tax deductions based on the medical insurance payments they make on behalf of employees and may face a state tax surcharge if they refuse to provide coverage for workers who make use of the state's public health system instead.
Continuing Coverage
Federal law places special restrictions on employers to offer continuing health coverage for workers who leave their jobs and lose their access to employer-sponsored group coverage. The federal program is known as the Consolidated Omnibus Budget Reconciliation Act, or COBRA. It applies to all employers with 20 or more workers who offer any form of medical insurance. COBRA requires employers and insurance companies to offer recently-departed employees continuing coverage by paying the full cost themselves. COBRA is useful for workers who are between jobs or become temporarily unemployed, allowing them to maintain the same level of coverage for one year.
Notification and Refusal
Employer medical insurance requirements also extend to notification and documentation acts. When a former employee is eligible for COBRA, the employer must notify her in time to begin coverage under COBRA before experiencing a lapse in coverage. Documentation also applies to workers who are eligible for employer-sponsored medical insurance but refuse to accept it. State laws may require employers to obtain employees' signatures indicating that they understand the cost of the insurance and choose not to enroll. This allows employers to avoid the fines and surcharges that come from failing to inform and offer medical insurance as required by law.
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