Q&A: Small Business Health Coverage

How should so-called “mom and pop” businesses handle insurance coverage?  Read on for more information.

Question

Is a small owner-only business eligible for group medical insurance? At this time, our company is comprised of the owner and his wife. There are no other employees yet, but we plan to hire employees in the future. Can we buy a group policy now or do we have to wait until we have other employees?

Answer

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The question of whether a “mom and pop” business can purchase medical coverage as a group often comes up. Each state’s insurance laws control the type of policies that can be sold in that state and also defines who is a “group.” Insurance laws vary from state to state, but generally a husband/wife business does not qualify as a group if there are no other employees. There must be at least one W-2 employee who is not an owner or business partner (or spouse of an owner or partner). In the meantime, the owner may apply for an individual policy to cover himself and spouse (and eligible children, if any).

Lastly, there is a small handful of states that continue to allow mom and pop businesses meeting certain criteria to qualify as a group. Carriers and brokers licensed in the state can provide specific information about the respective state’s rules.

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