Small group enrollment and contribution rules
Small group carriers can ask a group to meet participation and employer contribution rules, and federal rules limit when a group can be held to an enrollment window. Here is how that works and what to ask a carrier.
Three rules that decide when a small group can start.
The details vary by carrier and by what the state allows, so the carrier’s filed rules are the source to ask for.
Minimum Participation
Michigan law lets a small group carrier require enrollment of up to 100 percent of employees seeking coverage for groups of 10 or fewer eligible employees, 75 percent for 11 to 25, and 50 percent for 26 to 50. See MCL 500.3709.
Employer Contribution Minimums
The participation limits are set in Michigan statute. For a minimum employer contribution, ask the carrier for its filed requirement, and model the contribution as a design decision before choosing.
The Annual Enrollment Window
A group that cannot meet the carrier’s rules may be limited to an annual enrollment period each year, so timing matters more than it first appears.
Why Large Groups Differ
Larger groups usually get more flexibility, because the carrier is less exposed to any one person’s decision.
What the rules say.
Federal rule text sets the outer limits. State law and the carrier’s filings supply the specifics.
Guaranteed Availability Is the Starting Rule
A small group generally has a right to coverage from an issuer that offers it, subject to limited exceptions. See 42 U.S.C. 300gg-1.
Issuers May Restrict Enrollment Periods
An issuer may restrict enrollment to open or special enrollment periods. See 45 CFR 147.104(b).
The Window Is November 15 to December 15
For a small group that cannot meet employer contribution or group participation rules as allowed under state law, the issuer may limit availability to an annual enrollment period from November 15 through December 15. See 45 CFR 147.104(b)(1)(i)(B).
Sources: 42 U.S.C. 300gg-1 · 45 CFR 147.104
What Michigan allows a carrier to require.
Michigan’s small employer chapter of the Insurance Code requires carriers to apply their coverage requirements uniformly, and caps the participation percentage by group size.
10 or Fewer Eligible Employees
A carrier may require enrollment of up to 100 percent of the employees seeking coverage through the employer.
11 to 25 Eligible Employees
A carrier may require enrollment of up to 75 percent of the employees seeking coverage through the employer.
26 to 50 Eligible Employees
A carrier may require enrollment of up to 50 percent of the employees seeking coverage through the employer.
A Waiver Cannot Be Taken Back
If a carrier waives its minimum participation rule for a small employer, it cannot later enforce that rule against that employer.
Source: MCL 500.3709, Minimum Participation Rules · MCL 500.3701, Definitions
We find out the rules before you apply.
We ask each carrier for its filed participation and contribution requirements and tell you which groups they apply to, so you are not surprised on the effective date.
Related pages.
How a Small Group Premium Is Set
Age, area, tobacco and family size, and what the rating rules leave out.
Small Group Health Insurance in Michigan
The Michigan small group market, plainly explained.
Small Group vs Large Group
Where the line falls and what changes on each side of it.
Questions that come up.
Short answers to the questions we hear most. Each links to the full page.
Can a small group be turned down for low participation?
Yes, within limits. In Michigan a carrier may deny coverage if too few eligible employees enroll, but it can require no more than 100, 75 or 50 percent depending on group size. Under the federal rule, a group that cannot meet participation rules may be limited to an annual enrollment period of November 15 through December 15.
Does the employer have to pay a minimum share?
Michigan’s statute speaks to participation. A minimum employer contribution is a carrier requirement, so ask for the carrier’s filed rule before the group applies.
When should a small group apply?
Early enough to meet any rule that limits the start date. If the group may fall short of a participation or contribution rule, plan around the November 15 to December 15 window.
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General information, not legal or tax advice. Plan-specific questions belong with the plan documents, the carrier and counsel.
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