New California Law SB 1375 – Affects Many Small Firm’s Group Health Insurance

The new California Law, SB 1375, was signed by Governor Brown on September 22, 2018 and will affect many small firm’s group health insurance. SB 1375 changes the Health Insurance Code to reclassify certain small employer groups as individuals. The affected firms will have to obtain individual health insurance in 2019, rather than the small employer group plans they currently have. Individual health insurance is typically more expensive with less provider network and benefit plan choices than small group plan offerings.

Fortunately, for CalCPA members and their firms, CalCPA Health received certain exemptions from SB 1375, which generally allows us to treat the affected firms as groups, and not as individuals. Commercial carriers (Blue Shield, UnitedHealthcare, Anthem, etc.,) must comply with the new regulations and reclassify these groups as individuals.

SB 1375 defines groups that consist entirely of owners/partners, and/or W-2 employees that are spouses of owner/partners, as not eligible for group health coverage. Even though these entities may be classified as employer/employees by other regulations, (e.g. Workers’ Comp, payroll tax, etc.,) SB 1375 specifically states they do not qualify for group health coverage and may only purchase individual plans.

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“April 15th Will Look Like a Picnic” 2nd edition

The Patient Protection and Affordable Care Act (ACA) is exceedingly vast. It deals with all aspects of the medical delivery system including insurance. Combine this with the numerous changes California is implementing and the result is tens of thousands of pages, comprising both federal and state regulations.

This book focuses on the key elements that affect California CPAs. Therefore, we will concentrate on those ACA regulations that are being adopted and implemented in California. And, while other states may have slightly different implementations, they will not be specifically addressed here.

Our intent is that you may use this book as a reference for the areas that are of particular interest to you, or those areas that expressly affect you. For example, if you are with a small firm and do not have any “large employer” clients, the large employer sections may be of less value to you than the information on small employers.

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