Health insurance law sorts employers by size, because small groups get extra protection, such as guaranteed issue and limited rating factors (covered later in this chapter).
Small group: 2 through 100 employees (CDI outline). A small employer must also have most of its employees in California and a bona fide employer-employee relationship, and it cannot be formed primarily to buy health plans.
Large group: 101 or more employees. A group policy not issued to a small employer is large group (§10181(c)).
Current law (§10753(q)) defines a small employer as at least one but no more than 100 employees, and sole proprietors, partners and their spouses are not counted as employees. On the exam, use the outline's 2 through 100.
Association coverage: when businesses buy through a trade association, each member's own status decides the market (§10753.05(b)(8)(A)). A 12-employee member is small group, a 300-employee member is large group, and a self-employed member with no employees is individual. Pooling members in an association does not turn them into one large group.
Contributory vs. noncontributory:
Noncontributory: the policyholder pays the whole premium, so everyone eligible is covered. For example, an association policy under §10270.5(a)(4) with no premium from the covered persons must insure all eligible persons except those who reject it in writing.
Contributory: employees pay part of the premium, often by payroll deduction, so each one chooses whether to enroll. Insurers often set a minimum participation level, because a plan that attracts mainly people who expect claims suffers adverse selection.
Small group participation: a carrier may not reject a small employer that offers coverage to 100% of its eligible employees and agrees to pay the premiums. Employees who waive because they have other group coverage, such as through a spouse, are not counted as eligible (§10753.05(g)). The test is the offer, not 100% enrollment.