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California Group Health 2-50 Employees

Guaranteed Issue Requirements

By law, California group health insurance is Guaranteed Issue (regardless of health) under certain guidelines.  This means insurers cannot decline coverage for 2-50 employee sized companies when they fulfill these requirements. Rates are unisex and cannot vary more than 10% higher or lower (also called the RAF or Risk Adjustment Factor) from the carrier published standard (1.0 RAF) rate for that specific plan. There are several main requirements: 

  1. The company must show that at least two “employees” were formally tied to the company for half of the prior calendar quarter. Proof must be provided in the form of the Quarterly Wage Report (DE-6) and/or the company’s Articles of Incorporation and Statement of Information or comparable corporate documentation. 
  2. Out of State Corporations.  Companies that incorporate in other states need a Certificate of Qualification within California which essentially allows them to do business here.  The carrier will base the effective date of coverage on when the Certificate of Qualification is filed, not the original incorporation date.
  3. LLC’s. The carrier bases the effective date on the state-stamped date of the LLC as long as it lists the Managers (need at least two enrolling). 
  4. At least 75% of eligible employees must enroll.   
  5. Over 50% of eligible employees must reside in California. Only a few carriers will consider covering a group with more than 50% of employees residing outside California.
  6. The company must pay at least 50% of the “employee” premium.