Here’s how management carve outs worked prior to health care reform.

 Historically the usual criteria to have a Management Carve out are by:

Job Classification

Management only,

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.

Management Carve Outs are NOT Guaranteed Issue since they do NOT comply with the participation requirements of AB 1672 Small Group Guaranteed Health Insurance

When can an EmployER and affiliated companies  have a Management Carve Out?

Health Net Notice

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

Health Net Explanation in their renewal guide.

Blue Cross Health Care Reform FAQ's Management Carve Outs
Blue Cross Health Care Reform FAQ’s Management Carve Outs

FAQ’s BC/BS 9/23/2010

Blue Shield FAQ’s

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

§2716   PROHIBITION OF DISCRIMINATION BASED ON SALARY.

FAQ’s

What about some employees/owners? on Individual Plans and others on the group plan?

Participation Rules

Related Pages on Management Carve Outs  

Broker ONLY Links

Summary of Underwriting Requirements
(Warner Pacific)