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Applicable Group Size & FTE Calculation

Story Content Provided by HealthPass on 1/5/16

Over the last few days there have been many groups submitted that do not qualify for coverage through HealthPass as they should be seeking coverage from the 100+ market. Please take note of the below excerpts from NYS Department of Financial Services website FAQs section. This information may help clarify the market through which your client should be seeking coverage and other questions they may have. http://www.dfs.ny.gov/insurance/health/faqs_sm_grp_expansion_1to100.htm

FAQs For Small Group Expansion to 1-100 Employees

Q-1. What is the definition of "small group" as of January 1, 2016?
A. Under New York law and the Patient Protection and Affordable Care Act (ACA), the definition of "small group" will be 1-100 employees as of January 1, 2016. See Q-6 thru Q-11 below for who is an employee.

Who is an employee?
Q-7. Who is an "employee" eligible for coverage under an employer group policy or contract?

A. Pursuant to the ACA, New York adopted the federal definition of employee in Insurance Law § 4235(d). Common law employees who are "employees" as defined in 42 U.S.C. 300gg-91(d)(5) are eligible for coverage.

Q-8. Who is a common law employee?
A. Generally, anyone who performs services for an employer is an employee if the employer can control what will be done and how it will be done. The common law test to determine control would look at behavioral control, financial control and the type of relationship between the parties. An "employee" does not include the sole owner of a business or a spouse of the business owner. More information on determining who is a "common law" employee is available on the IRS website at
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employee-Common-Law-Employee and http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee.

Q-9. Are 1099 workers (i.e. independent contractors) considered employees eligible to be covered under an employer's group policy or contract?
A. All individuals who are "employees" as defined in 42 U.S.C. 300gg-91(d)(5) may be covered by a group policy or contract. Insurers may not prohibit a "1099 Employee" from being treated as an employee eligible for coverage. U.S. Department of Labor regulations and the Internal Revenue Code apply a common law definition of employee based on a case-by-case factual analysis. Department of Financial Services Office of General Counsel opinions on coverage for independent contractors are available at http://www.dfs.ny.gov/insurance/ogco2005/rg051117.htm and http://www.dfs.ny.gov/insurance/ogco2008/rg081001.htm

Q-10. Are leased employees eligible to be covered under an employer's group policy or contract?
A. Whether a leased employee is eligible for coverage should be made on a case-by-case basis. If the leased employees are "employees" of the lessee as defined in 42 U.S.C. 300gg-91(d)(5), then they will be considered employees of the lessee.

Group Size Determination/Counting Methodology

In determining group size an insurer shall ask and may rely upon the information provided by employers, including appropriate tax documentation.

Q-13. How should employees be counted when determining group size?
A. The "full-time equivalent" (FTE) employee counting method in 26 U.S.C. 4980H(c)(2) must be utilized to determine group size. This method is the same calculation used to determine employer liability under the "Shared Responsibility for Employers" provisions of the ACA and Internal Revenue Code.

Q-14. How should part-time employees be counted when determining group size?
A. When determining the employer's group size, part-time employees should be counted using the FTE counting method in 26 U.S.C. 4980H(c)(2).

Q-20. Are retirees included when determining group size?
A. Generally, retirees are not "employees" under 42 U.S.C. 300gg-91(d)(5) and thus not counted in the group size. However, exceptions should be considered on a case-by-case basis under 42 U.S.C. 300gg-91(d)(5).

Q-21. Are individuals enrolled in COBRA included when determining group size?
A. Generally, individuals enrolled in COBRA are not "employees" under 42 U.S.C. 300gg-91(d)(5) and thus not counted in group size. However, exceptions should be considered on a case-by-case basis under 42 U.S.C. 300gg-91(d)(5).

Q-23. When an employer designates different classes of employees for purposes of health insurance coverage as permitted by the Insurance Law, are all classes combined for purposes of counting employees?
A. Yes. For example, union employees are counted together with other employees in determining group size.

Q-24. Is employer group size based (1) upon the actual number of FTE employees or (2) upon the number of employees in a class based on conditions pertaining to employment covered under a policy?
A. An employer's group size is based upon the employer's actual number of FTE employees and not upon the number of employees being offered coverage in a class based on conditions pertaining to employment. Consequently, if a large employer (i.e. an employer with more than 100 FTE employees) wishes to offer coverage to a permissible class of employees based on conditions pertaining to employment pursuant to 11 NYCRR 52.18 (f), the class should be issued large group coverage regardless of how many employees are in the class. For example, an employer with 200 FTE employees in Manhattan and 20 FTE employees in Syracuse wants to offer coverage to the Syracuse employees as a distinct class based on geographic location. The Syracuse employees should be issued large group coverage even though the class size is only 20 employees.

Q-25. If two or more corporations are under common control, are the employees of each corporation counted separately or combined?
A. All entities treated as a single employer under 26 U.S.C. §414(b), (c), (m) or (o) are treated as one employer and all employees are counted together to determine group size.

Should you have questions contact your General Agent. If you do not work with a General Agent, you may contact HealthPass directly at 212-252-8010 prompt 1 or sales@healthpassny.com.