The Insurance Companies have 

Participation and Contribution rules 

as they are REQUIRED to write your company under Health Care Reform (AB 1083 ♦  §10753 et seq. Non Grandfathered Plans) regardless of the health status of the owner, employees or dependent and want to make sure that they get young & healthy employees along with those more prone to claims.

The Principles of Insurance require a large group of people so that there is enough money to pay claims and meet the 80% loss ratio rule, thus spreading the risk and avoiding “adverse selection.”

If an employer is not covering the  employees… the health plan might not qualify as  tax deductible business expense under IRS Code Section §106.  The employer may require the employee to pay part of the premium, which can be deductible under IRC §125.


What are the rules of minimum participation & contribution?

EmployER application, brochures & each carriers manuals

Check out the Option during Annual Open Enrollment 11.15 to 12.15 where there are NO Participation rules!


Steve Shorr Explanation of Participation Rules
Rules Summary - Requires Broker Password
Rules Summary – Requires Broker Password

Spread Sheet of Carriers Rules Warner Pacific – Carrier 411
Broker ONLYEmail us to discuss

Insurance Code §10753.06. (Health Reform – Non Grandfathered Plans)

Every carrier shall file with the commissioner the reasonable participation requirements and employer contribution requirements that are to be included in its health benefit plans. Participation requirements shall be applied uniformly among all small employer groups, except that a carrier may vary application of minimum employer participation requirements by the size of the small employer group and whether the employer contributes 100 percent of the eligible employee’s premium. Employer contribution requirements shall not vary by employer size.

A carrier shall not establish a participation requirement that

(1) requires a person who meets the definition of a dependent in subdivision (e) of Section 10753 to enroll as a dependent if he or she is otherwise eligible for coverage and wishes to enroll as an eligible employee and

(2) allows a carrier to reject an otherwise eligible small employer because of the number of persons that waive coverage due to coverage through another employer. 

[some carriers will reject if the person waiving is the ONLY common law employee – call or email for your situation]

[Health Reform §2708 42 US §300gg requires that Employees be eligible within 90 60 days.  DOL Guidance 2012-02 national  Health Reform Facts Q & A 249 (email us for a copy) Learn More⇒ Our Page on waiting periods]

Definition – Minimum Essential Coverage 5000A  (f)

Please note that while the law mentions that an employee that is covered under another group plan (spousal) doesn’t count towards the participation level, the practice has been, to include Medicare, VA – Veteran’s, for many companies, EVEN individual plans and Medi-Cal etc.


Some Insurance companies might consider the non union employees as guaranteed issue, if the employer is mandated under a collective bargaining agreement  to contribute to Union Labor Fund.  Blue Shield Quick Underwriting Guideline Page 5 

Extra 6 week or more waiting period for Part Timers SB 1790 – Insurance Code §10700 f 1 d

Related Pages in Participation & Contribution Requirements Section

If an employee opts out, the employER may not reimburse him for it. and it’s a $100/day fine!

Health Reform §2708 42 US §300gg requires that Employees be eligible within 90 days.  DOL Guidance 2012-02   Learn More⇒ Our Waiting Period Page

Check out the rules on Plan Anniversary, late enrollee and Open Enrollment in the Administrative Guide for the Insurance Company that you select.  This is another way that adverse selection is avoided, one must be on the plan for the entire year, not just when you are ready to turn in a claim.

Similarly Situated Individuals



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