Group Health Insurance Requirements in Kansas

If you are a Kansas employer thinking about offering coverage, or renewing a plan you already have, you have probably run into rules that never quite explain themselves. Group health insurance requirements in Kansas come from two different places: federal law under the Affordable Care Act, and the rules each insurance carrier sets for who can buy a small-group plan and how many people have to sign up. This guide separates the two in plain language, so you know what is actually required and what is common carrier practice.

None of this is legal advice, and if your situation is unusual, an accountant or benefits attorney is worth the call. For most Kansas small businesses, the questions below cover what we hear every week: do I have to offer a plan, how many employees do I need, and how much am I on the hook for.

It also helps to know who is actually setting each rule. Some of what follows comes straight from federal law and applies to every employer in the country, Kansas included. The rest is set by the insurance carriers themselves, plan by plan, and can shift depending on which company you buy from. Mixing the two up is the most common reason employers think a rule is stricter, or looser, than it really is.

Does your business have to offer coverage?

For most Kansas small businesses, the answer is no. There is no federal law that requires an employer with fewer than 50 full-time-equivalent employees to offer health insurance. Offering a plan is a business decision you make to attract and keep good people, not a box you are required to check.

That changes once your business reaches 50 or more full-time-equivalent employees. At that size, the IRS considers you an Applicable Large Employer, and the ACA's employer shared responsibility rules apply. An Applicable Large Employer that does not offer coverage meeting minimum value and affordability standards to enough full-time employees can owe a payment if even one employee gets a subsidized plan on the individual marketplace instead. The IRS lays out exactly how that threshold and payment work on its employer shared responsibility provisions page, worth reading directly if your headcount is near the 50-employee line.

Under 50 employees, you are free to offer coverage or not. Most employers we work with choose to offer it anyway, because a group health plan is one of the more affordable ways to compete for workers against bigger companies nearby.

How many employees you need to buy a group plan

Kansas defines the small-group market as businesses with 2 to 50 full-time-equivalent employees. That is the size range most carriers built their small-group plans around, and it is where a group can usually get rates set without medical underwriting, meaning no one on your team is priced or declined based on health history.

You do not need a big roster to qualify. Many carriers writing small-group business in Kansas will issue a plan to a business as small as one owner plus one employee. If you are a true team of one, with no employees at all, you would generally look at individual marketplace coverage instead of a group plan. Our guide to small business health insurance in Kansas covers where that line falls and what small-group plans typically include.

Once your full-time-equivalent count passes 50, you move into the large-group market, which uses different plan designs, different rating rules, and the federal requirements described above. See large group health insurance if your headcount is near or past that mark.

How your employee count actually gets calculated

"How many employees for group coverage" sounds like a simple headcount, but both carriers and the IRS use full-time-equivalent employees, not a raw number of names on payroll. A full-time employee is generally someone working 30 or more hours a week. Part-time hours get added together and divided down into equivalent full-time positions, so five employees working 15 hours a week roughly count as two and a half full-time-equivalent employees, not five.

This matters at both ends of the size range. On the small end, a business with a few part-time workers might have fewer full-time-equivalent employees than its headcount suggests, which can affect eligibility rules and, at larger scale, whether you are near the 50-employee threshold for the ACA employer mandate. On the large end, a business that looks like it is under 50 by headcount alone can still cross into Applicable Large Employer territory once part-time hours are added in. Owners, and in many cases their spouses, are typically excluded from the count, but the details depend on your business structure. If your team includes a mix of full-time and part-time workers, it is worth having us run the actual number before you assume which set of rules applies to you.

Participation requirements

Beyond who is eligible, carriers care about how many of your eligible employees actually enroll. This is called a participation requirement, and it exists because a group plan works financially only if a reasonable share of the group buys in, not just the employees who expect to use it most.

Participation rules are not set by Kansas or federal law. They are set by each insurance carrier, and carriers commonly ask that around 70 percent of your eligible employees enroll in the plan, though the exact figure and how it is calculated varies by carrier and by plan. Employees who already have coverage elsewhere, such as through a spouse's plan or Medicare, are often excluded from the count through a waiver, which can make the requirement easier to hit.

If your business is right on the edge of a participation minimum, do not assume you are stuck. We can often find a carrier whose participation rule fits your group as it stands, rather than asking you to talk reluctant employees into a plan they do not want.

Contribution requirements

Most carriers also require you, the employer, to pay a minimum share of each enrolled employee's premium, usually just the employee-only tier and not dependents. A common figure carriers ask for is around 50 percent of the employee's premium, though again this is a carrier rule, not a law, and it varies by plan and carrier.

Paying more than the minimum is always allowed and is one of the more direct ways to make a plan more attractive without changing the plan design itself. Some employers cover 100 percent of the employee's premium and let workers pay their own way for dependents; others stick close to the carrier minimum and put the savings toward other benefits. Our guide to small business health insurance cost walks through how contribution choices change your total bill.

Other rules worth knowing

A few more ACA market rules apply to small-group plans no matter your size:

• No medical underwriting. Small-group carriers in Kansas cannot charge your business more, or decline coverage, because of an employee's health history. Rates are based on the group's age, location, and plan choice, not individual claims.
• Capped waiting periods. If you make new hires wait before coverage starts, the ACA caps that waiting period at 90 days.
• Set benefit categories. Small-group plans have to cover certain categories of care set by the ACA, from hospital stays to prescription drugs, so a bare-bones plan that skips whole categories is not legal to sell in the small-group market.

You can read more about small-group market rules directly from the federal marketplace at healthcare.gov, or from the Kansas Insurance Department, which oversees insurance sold in the state.

None of these rules are meant to make offering coverage harder than it needs to be. They exist to keep the small-group market fair for every business buying into it. If you want help sorting out how participation, contribution, and eligibility rules apply to your specific team, that is exactly what we do. Request a free quote and we will walk you through it, or call 913-336-5041.

Ready to see plans instead of just rules? Compare real numbers with our small business health insurance page, or start a free quote today.