What are participation rules for carriers?
Insurance carriers often require a threshold number of employees (usually some percentage of the total number of employees) to elect coverage for the group to qualify for insurance. This is called a participation requirement. However, depending on the reason an employee declines coverage, some employees that decline insurance won’t be considered at all when calculating […]
Insurance carriers often require a threshold number of employees (usually some percentage of the total number of employees) to elect coverage for the group to qualify for insurance. This is called a participation requirement. However, depending on the reason an employee declines coverage, some employees that decline insurance won’t be considered at all when calculating participation percentages.
Valid Waivers
If an employee declines coverage for good reason (e.g., they’re on their spouse’s plan), they’re considered to be a valid waiver. Valid waivers are removed from the total number of eligible employees when calculating participation-meaning that these employees don’t count toward or against the participation requirements.
Example
If a group has 100 eligible employees and the carrier’s participation requirement is 60%, the required number of participants is 60. However, if 10 of these eligible employees decline for good reason (valid waiver), the total number of eligible employees is now 90. As a result, the number of participants needed to meet the 60% threshold is now 54.
Conclusion
Participation rules often require a certain percentage of a company’s total employees to opt in to an insurance plan, or else the carrier won’t provide a group health care plan.
