888-765-5400Changes to NC’s Small Employer Group Health Coverage Reform Act Related
Federal and NC Definitions Now Aligned
Date: 08/23/2013
Recently, the North Carolina (NC) legislature passed House Bill 649, which made changes to NC’s Small Employer Group Health Coverage Reform Act in order to align federal and NC definitions related to small employer group health plans – specifically, those definitions included as part of the Affordable Care Act.
Important changes affecting BCBSNC employer groups beginning January 1, 2014 include:
Sole Proprietorship Change
Self-employed individuals (or sole proprietors) with no common-law employees are no longer eligible for non-grandfathered small employer health plan coverage; conversely, a sole proprietor is eligible for group coverage if there is at least one common law employee (e.g., non-family member, etc.) employed.
Under the new law, self-employed individuals who are currently on a small group plan will not be able to renew their small group plan when their current policy period ends. At that point, they can enroll in an individual product rather than a small group health policy. If the individual’s current small group plan renews outside of the Annual Enrollment Period (which begins on October 1, 2013 for plans effective in 2014), they could still enroll in an individual product under a special enrollment period. They can obtain one of these policies either through an appointed agent, the federally-facilitated Exchange or by contacting a BCBSNC representative.
Full-Time Equivalent Employees
House Bill 649 states that “the number of employees shall be determined using the method set forth in section 4980H(c)(2) of the Internal Revenue Code.” (A link to this section of the Internal Revenue Code can be found here.)
In linking the employee count to the method set forth by the IRS, this law clarifies that full-time equivalent employees, which are determined based on the hours of service of employees who are not full-time, are taken into account.
Common Ownership Change
Currently, if a subsidiary company that has a separate tax ID number applies for a group policy and the subsidiary has fewer than 51 full-time employees (FTEs), but the subsidiary combined with the parent company has more than 50 FTEs, then the subsidiary company would be considered a small group even though the total number of FTEs is above the small group threshold.
Under the new NC law, if a subsidiary has fewer than 51 full-time or full-time equivalent employees, but the subsidiary combined with the parent has more than 50 full-time or full-time equivalent employees, then the subsidiary would be considered a large group, even if the subsidiary has a separate tax ID number from the parent company and were to get their own policy separate from the parent company.
Under this new law, BCBSNC must now know if a group is part of a controlled group that qualifies as a single employer and if so, how many full-time or full-time equivalent employees are employed by the consolidated group. The size of the controlled group will determine the market segment for the group.
For more information on health insurance coverage in North Carolina, please visit our website at www.nchealthplans.com or call our toll free number 888-765-5400 and speak with one of our professional agents. Our agency provides coverage for health insurance in North Carolina through Blue Cross Blue Shield of North Carolina (BCBSNC). You may qualify for a 15% healthy lifestyle discount if you are in excellent health. Call us for details.
None of the information contained herein should be construed as legal advice. All information is for educational purposes only. The requirements of the Affordable Care Act (ACA) may be different for everyone. Please consult your legal counsel or tax advisor for further details. All the information contained in this article is from a Published Producer News Article by BCBSNC on 8/23/2013.