- Yes, a small group may exclude out-of-state employees but this could affect the group’s participation. Therefore, if not allowing the out-of-state employees to enroll, the group may not meet participation and may not be quoted. If purchasing a plan though SHOP, all full-time employees must be offered coverage, and if all the criteria are met, the group may be entitled to a tax credit.
- The answer to your question is yes. If a small employer offers more than one plan to its employees, the uniform percentage requirement may be satisfied in one of two ways. The first is on a plan-by-plan basis, meaning that the employer’s premium payments for each plan must individually satisfy the uniform percentage requirement. The amounts or percentages of premiums paid toward each plan do not have to be the same, but they must each satisfy the uniform percentage requirement if each plan is tested separately.
The other permissible method to satisfy the uniform percentage requirement is through the reference plan method. Under the reference plan method, the employer designates one of its plans as a reference plan. Then the employer determines a level of employer contributions for each employee such that, if all eligible employees enrolled in the reference plan, the contributions would satisfy the uniform percentage requirement as applies to that reference plan, and the employer allows each employee to apply the minimum amount of employer contribution determined necessary to meet the uniform percentage requirement toward the reference plan or toward coverage under any other available plan.
Example: Employer has four FTEs with average annual wages of $23,000. Employer offers two plans under a composite billing system with different tiers of coverage. Plan X is $4,000 per year for employee-only coverage and $10,000 for family coverage, and Plan Y is $7,000 per year for employee-only and $12,000 for family coverage. Employer designates Plan X as the reference plan. Employer offers to pay 50% of the premium for employee-only coverage under Plan X, which is $2,000. In the event that an employee elects family coverage under Plan X or either employee-only or family coverage under Plan Y, Employer would make the same contribution ($2,000) toward that coverage and satisfy the uniform percentage requirement.