Commercial Healthcare in California
In 2021, California had over 4.2 million businesses, employing over 16.5 million residents. All these businesses need commercial healthcare insurance policies for their employees to protect them in the event of work-related accidents and illnesses. While some business healthcare plans provide strictly medical and dental coverage, other commercial insurance provides the insured employee with money to replace the lost regular income due to a health issue. Such payouts can be spent by the insured on whatever they want - not just the medical bills.
Although California law requires employers to provide workers' compensation insurance to their employees, other non-mandatory health coverages like disability coverage are good for motivating and retaining your employees. For instance, California disability insurance coverage helps employees have sufficient income to cover health-related issues and to cover the bills when an injury or illness prevents them from working.
Employers can purchase commercial health insurance policies directly from health insurance companies or through the state-licensed insurance agents. It is best to speak with a California licensed insurance agent or broker before purchasing a commercial medical insurance policy. An agent can guide you on how to get affordable group health insurance coverage that is within your company's budget. Small business owners, organizations, large business owners, and private and public institutions should consider getting commercial health insurance policies.
Let’s look at the most common types of Commercial Health Insurance in CA:
Group Employer-Sponsored Health
Group employer-sponsored health insurance is a type of a Group Health Plan (GHP) that California employers provide for their employees and sometimes extend to their families. The employer is responsible for choosing the plans and determining the coverage that will be offered to the members of the group. Group employer-sponsored health insurance policies premiums are usually shared between the employers and their employees. Employers can take advantage of small business tax credits to cover premiums. Small business owners who pay at least 50% of their employee’s health premiums and have less than 25 employees whose average income is $50,000 or less per year can qualify for tax credits that cover about 50% of group plan premiums.
There are two types of group employer-sponsored health insurance in California:
- Small group employer-sponsored health insurance
- Large group employer-sponsored health insurance
Small group employer-sponsored health insurance is designed for employers with fewer than 50 employees. In contrast, employers with 50 or more employees must purchase large group employer-sponsored health insurance. The more employees your company has, the more bargaining power and possibly lower costs you have with the insurer.
All group employer-sponsored health insurance policies are ACA-compliant, which means that there are no pre-existing condition exclusions. Additionally, employees will enjoy essential health benefits and include annual physicals. Most California GHPs include group health dental coverage. Employers should speak with California-licensed insurance agents before purchasing group employer-sponsored health insurance policies for professional guidance on selecting the right structure (HMO, PPO, POS, or HSA). Group employer-sponsored health insurance is good for small businesses, large businesses, sole proprietorships with one employee, and partnerships.
California Disability Income Insurance
California disability insurance, also known as Disability Income (DI insurance) or Paycheck Insurance, offers wage replacement benefit for disability when accidents or illnesses render the insured individual incapable of performing their regular work. In other words, the benefits of being on disability while being covered by a disability insurance policy are that you will get paid a portion of the money you would have made if you were working in your regular job. Eligible California workers can receive up to 60% to 70% of the 5 to 18 months’ wages they earned before filing a claim and payments usually last for up to 52 weeks.
What is Considered a Disability in California?
In California, disability is an injury or illness that precludes you from conducting your regular trade. It can be a physical or mental issue, including various medical conditions and elective surgeries.
DI insurance premiums are paid through regular payroll deductions. California DI insurance comes in two different types:
- Short-term disability (STD) income insurance: It provides coverage when an employee has to be away from work for a short period due to an illness, accident, or injury. The employee is expected to return to work after a few weeks, months, or a year. Most short- term disability income insurance policies have a waiting period of zero to 14 days, and the benefits usually last for two years
- Long-term disability (LTD) income insurance: It provides coverage when an employee has to be away from work for a long period. STD and LTD usually work together such that individuals would have to start with STD benefits before transitioning to LTD benefits. The waiting period for LTD benefits is usually between a few weeks to several months, and coverage typically lasts from a few years to the rest of the insured's life
Discuss your California disability insurance needs with a state-licensed health insurance agent.
California Workers’ Compensation Insurance
California health insurance mandate: California is home to over 4.2 million businesses employing over 16 million workers. The California law mandates all the owners of these businesses to provide workers compensation benefits to their employees. Failure to have workers’ compensation coverage in the state is a misdemeanor that attracts severe penalties.
| Penalties for Employers’ Failure to Carry Workers’ Compensation Insurance in California | |
| First conviction | Second or subsequent conviction |
| Double of premium amount | Triple of premium amount |
| Minimum fine of $10,000 | Minimum fine of $50,000 |
| A year jail term | One year jail term |
Workers’ compensation insurance covers employees when they sustain on-the-job injuries or become ill. Employers can purchase workers compensation insurance through an agent from any of the over 200 licensed insurance companies in California or the State Compensation Insurance Fund (State Fund).
How Long Can You Be on Workers’ Comp in California?
The maximum amount of time you can be on Workers’ Comp in California is 2 years (104 weeks). If you are still injured 2 years after filing workers compensation claim, you may be able to apply for the disability benefits through the State of California Employment Development Department.
How Many Types of Workers Comp Benefits are Available in California?
There are five types of workers compensation benefits available to employees in California, and an injured worker may be able to take advantage of one or more of these benefits.
| Types of Workers’ Compensation Insurance Policies in California | |
| Medical care | It covers hospitalization, dental care, physician services, x-rays, physical restoration, laboratory services, physical therapy, chiropractic treatment, and prescriptions |
| Temporary disability benefits | It helps to temporarily replace two-thirds of lost wages when an employee is unable to work due to job-related injuries or illnesses. Temporary disability benefits coverage does not start for the first three days an employee is off the job unless the person is hospitalized overnight. Typically, the injured or sick employee will be paid every two weeks until they are able to return to work or the condition becomes permanent |
| Permanent disability benefits | An employee enjoys this benefit when a work-related injury or illness results in permanent impairment. Permanent disability benefits payments are usually made every two weeks or a lump sum settlement can be made |
| Supplemental job displacement benefit (SJDB) (for injuries after 01/01/04 and before 01/01/13) is a non-transferable voucher for skill enhancement or education-related retraining that is paid for injuries sustained between 01/01/04 and 01/01/13. The voucher can be used to cover retraining or skill enhancement costs like tuition, books, and about 10% of the voucher can be used to pay counselor costs. To qualify for SJDB, the injured employee must have been incapable of working for 60 days, have a permanent disability, and there is no provision for alternative work | |
| Supplemental job displacement benefits | Supplemental job displacement benefit (for injuries on or after 01/01/13) is a non-transferable voucher for education-related retraining and/or skill enhancement for injuries sustained on or after 01/01/13. The voucher can be used to cover expenses at California public schools or any state's eligible training provider. It pays for books, licensing or professional certification fees, tuition, tools, and examination preparation course fees. Additionally, it can be used to buy computer equipment of up to $1,000 and to reimburse up to $500 in miscellaneous expenses. Only employees without alternative work from their employers and whose injuries have resulted in permanent disabilities are eligible for supplemental job displacement benefits. Employees can redeem their voucher for up to $6,000, regardless of the extent of permanent disability |
| Return-to-work supplement program (RTWSP) (for injuries on or after 01/01/13) is a one-time supplemental payment of $5,000 to employees who experience a wage loss of earnings that is disproportionate to their permanent disability ratings. Only employees who sustained injuries on or after 01/01/13 and who have received an SJDB voucher for that injury are eligible for RTWSP benefits. Such employees must apply online within one year of the date the SJDB voucher was sent to them | |
| Death benefits | A death benefit is paid out to cater for the burial expenses of an employee who dies due to work-related injuries. Also, certain amounts are paid to surviving dependents for a period of time. The death benefit amount largely depends on the number of dependents and whether they are totally or partially dependent |
You can review the Workers’ Compensation Information Guide for more information on California workers’ compensation insurance. If you have questions about workers comp in California, contact a knowledgeable, licensed insurance agent who can help you get an affordable workers’ compensation insurance policy that is within your company’s budget.
