Small Employer Health Reform

In recent years, several states have enacted small employer market reforms that are designed to enable small employers to obtain health insurance at rates that are lower than rates that have traditionally been available to them. The reforms include laws that guarantee renewals; that limit the extent to which your group's health status can be used to set rates; that provide basic, low-cost policies that do not include costly benefits that are mandated for standard policies; and that require insurers to make coverage available to you regardless of your employees' health condition. No two states have the same set of reforms. An insurance agent can give you more information about the specifics in your state.

In the Health Insurance Portability and Accountability Act of 1996, Congress extended some of these state reforms to the federal level. As of June 30, 1997, insurers that offer health plans in the small business market cannot exclude any small business from coverage.

If insurers choose to offer plans in the small business market, they must offer the plans to all small businesses in that market. Thus, for example, an insurer cannot choose to drop your coverage because one of your employees develops a heart condition. To gain the protection of these federal rules, though, you must have at least two employees