What is minimum participation?
Q: What is minimum participation?
A: When establishing a new group health insurance policy, the insurance company may require that a minimum percentage of all eligible employees must be added to the policy. This is referred to as the minimum participation requirement. Health insurance regulations in some states define the participation percentages that can be required by the insurance companies, but there can be variances from one insurance company to another, as long as these variances fall within the guidelines of any state legislation. A common minimum participation percentage for small group health plans is 75% of all eligible employees. This may vary based on the amount of the premium that is being paid by the employer. For instance, if the employer is paying 100% of the employee only premium, the insurance carrier may request that 100% of all eligible employees join the group health plan. There would be no reason that an eligible employee would not join the group plan if the employer is paying 100% of the premium amount.
Insurance companies have a minimum participation requirement for various reasons. One of the primary reasons is to prevent an employer from selecting which employees can join the plan and only offering coverage to those employees with health conditions, or from taking advantage of carve-out options that have different underwriting guidelines. Since small group health insurance is guaranteed issue, the insurance companies want to insure as many of the eligible employees as possible, which reduces their overall risk in paying claims toward this group by requiring even the healthy employees to partake in joining the employer-sponsored health plan. If an employer is not paying the entire employee premium, there are bound to be a certain percentage of employees that do not want the health insurance because they can’t afford, or can’t justify the additional personal expense. This attitude is more common amongst the healthy employees who are not in need of health care and are less likely to consider medical insurance as a necessary expense.
In determining minimum participation percentages, the insurance companies will not consider employees that have other health insurance coverage available to them, either through another employer or the employer of a spouse. Although these persons are considered eligible employees, they are excluded from the minimum participation equation. If the employer offers group health insurance through more than one insurance carrier, these insurance carriers are not able to request the standard 75% participation, so they make adjustments accordingly. They may require a minimum number of employees enroll with them, or a lesser percentage, such as 50%. Minimum percentage requirements may also be affected by the type of health plan that they employer has chosen for the group.
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