Here’s how management carve outs worked prior to health care reform.
Historically the usual criteria to have a Management Carve out are by:
Union vs. non-union,
Salary vs. non-salary
These classifications require Insurance Company underwriting approval based on their rules.
Carve Out’s based on Ownership in the company (ies), nepotism (family ties) are not permitted as Similarly situated employees, must be treated equally.
When can an EmployER and affiliated companies have a Management Carve Out?
Carve outs are acceptable as long as it’s a true classification, like Management or Salaried Workers only. Carve outs are non-guarantee issue which means health statements are always required.
However, you can do a Guaranteed Issue carve out if the group meets all 3 criteria:
- Total group size is under 50 eligible
- At least 51% of eligible employees reside in California
- Non-carve out population is offered coverage through another carrier
Email dated 8/10/2011
FAQ’s BC/BS 9/23/2010
Please note that the “Final Rule” (2.27.2013 13416 Federal Register Vol 78) allows an Open Enrollment Period where a Small Group can enroll without meeting participation or contribution requirements.
Health Care Reform’s Effect
What about some employees/owners? on Individual Plans and others on the group plan?
Please send us your DE 6 or 9 Employer SDI reporting and relevant documents for help in determining how you can qualify for Guaranteed issue Medical coverage under AB 1672 Small Group Health Care Reform. Also, let us know how many of the employees you want to cover and we can see if it works.
A group being affiliated or controlled can be an advantage to employer’s wanting more coverage or might be considered a disadvantage for those who want to minimize their benefit costs and ability to do Management Carve Outs.
Employer Companies that are affiliated companies (common ownership) and that are eligible to file a combined income tax return for purposes of state taxation shall be considered one employer. CA Insurance Code §10700 w 1
Related Pages on
- Common Ownership – Affiliated Companies – Corporations
- Pre – Health Care Reform – Management Carve Outs
- Salary Discrimination §2716 – Not enforced
- Similarly Situated Employees
Broker ONLY Links
Summary of Underwriting Requirements
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