Small Group Health Insurance

Small group medical insurance refers to an insurance policy that is issued to a group of individuals, usually employees of a small business, consisting of between 2 and 50 people. Under California law AB 1672, small business employers are guaranteed group coverage should they decide to purchase it. The employees are covered regardless of the condition of their individual health. Owners are generally counted as employees, so sole proprietorships with one employee qualify, as well as partnerships without any employees.

California state law AB 1672 say that small employers cannot be denied coverage as long as they:

  • Have been in business longer than two months
  • Are in compliance with insurer requirements regarding employer contribution
  • Are in compliance with insurer requirements regarding employee participation
  • Offer the group medical insurance to all eligible employees
  • Pay their premiums

The key provisions of AB 1672 are:

  • Guaranteed issue and renewal of small group policies
  • Rules regarding rates for small groups
  • Rules regarding limitations on pre-existing condition exclusions, and
  • A requirement that plans and brokers provide fair information about all products during the sales process.