NY Small Group Health Insurance Owner Only Guidelines

All NY small group insurance carriers have updated their small group guidelines for businesses with only the owner and/or the owner’s spouse enrolling in the plan (aka Owner Only groups). All carriers will now require one common law employee enrolled for a group which has only 1 owner. They will allow for LLC, S and C corps with 2 or more owners to enroll only 1 owner if they are not husband and wife. This is the key to working on ways to qualify your small business for group health insurance, and we can help you get you coverage if you contact us to request a quote.

NY Small Group Health Insurance Owner Only Guidelines

There are new updates to NY Small Group Health Insurance Owner Only Guidelines that might affect your ability to maintain small group health insurance for your business.

NY Department of Financial Services (DFS) has recently instructed health insurance carriers in NY State to abide by new guidance regarding the ongoing eligibility of OWNER ONLY health insurance groups. This guidance is being used to clarify what constitutes a small group under the Affordable Care Act (ACA) as well as the Employee Retirement Income Security Act (ERISA).

This new small group eligibility rule is to clarify that at least one common law employee must ENROLL into medical coverage in order to qualify for small group health insurance when the sole enrollee is the ONLY business owner (100% shareholder). This aligns with the ERISA definition of employer sponsored group health insurance coverage and clarifies that a group may NOT consist of only a sole business owner. To qualify for group health insurance, there must be at least one enrolling employee who meets the common law employee definition under federal rules. A common law employee is defined as someone OTHER THAN the Owner or the Owners Spouse.

If no “common law employees” are ENROLLED on the health plan other than the sole owner (100% shareholder), an employee benefit plan does not exist. The ‘owner’ or the ‘owner’s spouse’ of the business, whether paid via W2 or K1, do NOT qualify as employees under federal rules (although they can join the health plan as an employee IF there is a common law employee also enrolled or if the business has 2 or more ‘owners’ who are not married to each other and 1 or more enroll).

If your company does not qualify for an employee benefit plan, you will LOSE YOUR GROUP HEALTH COVERAGE upon renewal and be forced into the individual market where there are very limited carriers, higher premiums, and more volatility.

How do the new owner only guidelines affect you?
This new guidance is different from how insurance companies used to handle ‘owner only health’ insurance groups. Before, if there was a common law employee eligible, they did not have to enroll if the group met the participation guidelines (usually 60% after valid waivers). Now, a common law employee must enroll, and the group must meet participation, if the only enrolling person on the plan is the business owner. Below are some ways we can help you become compliant so you can enroll or keep your ny small business health insurance plan.

How can you become compliant when only an owner or owner’s spouse is enrolling on a group health plan?
It depends on how your company is incorporated, how employees and owners are paid, and which insurance company you are enrolled with.
C-Corp, S-Corp, and LLC groups with 2 or more Owners who are not married: This is a group with only owners and no W2 employees. These are OK with most carriers as long as the waiving owner(s) have qualifying other insurance so they meet participation requirements.
C-Corp, S-Corp, and LLC groups with only 1 owner (100% shareholder) plus at least 1 W2 employee: These are NOT allowed if only the owner enrolls, but is OK if the W2 employee ENROLLS. Must have at least one common law employee enrolled.
Sole Proprietors: Not eligible unless a common law employee is enrolled. Sole proprietors usually have one owner but unless there is a common law employee ENROLLED, the Sole Proprietor is ineligible for group health insurance and must go to the Individual Marketplace.
C-Corp, S-Corp, and LLC groups with W-2 employees: This is allowed if the owner or owner’s spouse are not the only ones enrolling. Make sure you count all FT W2 employees plus owners to make sure you meet participation which is usually 60% after valid waivers.
There might be some workarounds if you don’t otherwise qualify under the owner only guidelines above so call us to start the process of protecting your ability to enroll in or stay in the NY small business health insurance market.

Please provide us with the following information if you want to call and discuss your specific company eligibility:
– Type of Business (S-Corp, C-Corp, LLC, LLP, Sole Proprietor)
– type of proof of employment available (NYS45, Sch C and NYS45, K1, etc)
– if you file K1s, how many owners are there in the business (needs to add up to 100% of outstanding shares)?
– Are owners listed on the NYS45, or only on the K1s?
– How many employees (including owners) are ENROLLED on the health plan?
– How many employees (including owners) have signed WAIVERS declining the health insurance?