Level Funded vs. Self Funded Health Insurance
Are you thinking which health insurance option is right for your
Many employee benefit laws only apply to employers who have a certain number of employees. The challenging part is that each law has its own definition and rules on how to count the number of employees when determining if a law applies to an employer. Here are some key examples:
COBRA rules generally apply to employers with 20 or more employees on more than 50% of its business days during the previous calendar year. Employers should count each full-time employee (based on their own definition of a full-time employee) as 1 employee. Each part-time employee counts as a fraction of an employee. For example, if an employer defines a full-time employee as one who normally works 40 hours per week, and a part-time employee works 20 hours per week, the part-time employee will be counted as 0.5.
Medicare Secondary Payer (MSP) rules generally apply to employers with 20 or more employees on 20 or more calendar weeks in the current or preceding calendar year. Employers should count each full-time and part-time employee as 1 employee. Any full-time or part-time employee who is on the employer’s active roster in a given week should be included in the count for that week.
FMLA rules generally apply to employers with 50 or more employees on 20 or more calendar weeks in the current or preceding year. Employers should count each full-time and part-time employee as 1 employee. Any full-time or part-time employee on the employer’s payroll in a given week should be included in the count for that week.
The Employer Mandate rules generally apply to employers with an average of 50 or more full-time equivalent employees in the preceding calendar year. Any employee who works 30 or more hours per week (or 130 hours or more per month) should be counted as 1 full-time employee. The full-time equivalency of a part-time employee is determined each month by taking the total hours worked that month and dividing that number by 120 (e.g. 90 hours worked in a month is the full-time equivalency of (90/120) or 0.75).
Form 5500 reporting requirements generally apply to employers who have 100 or more participants covered by a plan subject to ERISA at the start of the plan year. Each employee covered by the plan at the start of the plan year should be counted as 1 employee regardless of employment status. For example, fulltime, part-time, and former employees covered by the plan at the start of the plan year should all be counted as 1 employee. Covered family members are considered “beneficiaries” (i.e. not participants) and are not included in the count.
Are you thinking which health insurance option is right for your
Health insurance is more than just a box to check—it’s a
As more companies enroll in health plans to provide employee benefits,