Who is an eligible employee?
Q: Who is an eligible employee?
A: Each insurance company may determine which employees are eligible to be included on the employer’s group health plan, as long as their restrictions do not violate state or federal regulations. In many cases, employee eligibility is somewhat at the discretion of the employer during enrollment in a new group health plan. However, the various insurance companies may also have their guidelines on who they will consider eligible to be included in the employer’s health insurance policy. Factors used in determining the eligibility of an employee may include how long they have worked for the company, how many hours per week they work, where they live, if they have other group health insurance and how they are paid by the employer. An insurance company that has an HMO plan with a limited network of participating providers may not accept an employee that does not live or work within a specific distance of that network. This would most likely be limited to out-of-state employees since an employer is not going to select a health plan that does not offer a network of physicians in the area where their business is headquartered.
Eligibility may also be determined by the waiting period selected by the employer at time of setting up the group health plan. This waiting period must be the same for all employees, therefore making all employees equally eligible as it relates to any set waiting period. Although an employee with existing group health insurance coverage, perhaps through their spouse’s employer, may be eligible to join their employer’s group health plan, they will not be counted as an eligible employee in determining minimum participation. A person may be eligible to join the group health plan if they are currently on COBRA through that employer’s previous or current health plan. When a small business switches health insurance carriers, the new insurance carrier must accept current COBRA members for the remainder of their COBRA option. So, even though they are not an active employee, they are still considered eligible to join the new group health plan.
In determining or verifying who is an eligible employee, the insurance company will often request that the employer provide copies of a recent quarterly wage report. This report will list all employees working for the company, as well as the total number of hours they worked in that previous quarter. Further documentation may be required for employees that are new hires and were not employed by the company for all three months indicated on the previous wage report. Since 1099 employees are not included on a quarterly wage report, proof may be required in the form of a previous year’s tax return by those insurance companies that accept 1099 employees.
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