Deciding Whom to Cover

Generally, when it comes to health care benefit coverage, the most important thing to remember is that once you have established your rules, you must apply them consistently.

Most employers impose a requirement that says that an employee must be actively at work in order to be eligible for coverage. You must be careful when defining the term actively at work, however. Actively at work generally means active full-time performance of all customary duties of the employee's occupation at the company or other location of business to which the company's business requires the employee to travel. In this context, a full-time employee is regularly scheduled to work at least 40 hours per week, 52 weeks a year.

An employee does not necessarily have to be physically at work in order to be considered to be actively at work, as it is defined for purposes of health plan eligibility. Otherwise, employees who go on vacation would risk losing their health plan.

Must you cover part-time workers? Generally, you don't have to, though you may if you wish. One thing you should remember is that if you don't set any minimum hours per week or per year that employees have to complete to remain eligible for health benefits, you cannot terminate their coverage when, for example, they go on a disability leave. To avoid that problem, some employers who want part-timers to participate will establish a rule that says that any employee who works, for example, at least 30 hours per week is eligible to participate in the health plan. You should discuss your alternatives with your health insurance provider.

Do you have to offer coverage to spouses or dependents of workers? In short, no. If you do, you should clearly define who is a dependent.

May you offer benefits to unmarried domestic partners? You may, of course, but if you do, you should be aware that the fair market value of the insurance paid may be taxable to your employee under federal law. Also, it can be very difficult to define who is a domestic partner — for example, how long must the relationship have lasted? If you're interested, talk to your insurance company about it.

Health care reform. The enactment of the Patient Protection and Affordable Care Act and related legislation heavily regulates the insurance industry, instituting benefit and coverage mandates. The law prohibits insurance companies from:

• denying coverage or refusing to renew coverage because of certain conditions;
• considering any factors other than age, geographic area, family composition and tobacco use for premium rating;
• imposing lifetime limits on the dollar value of coverage; or
• dropping qualifying children from their parents' insurance plans before the age of 26.

Some of these provisions are already in effect (for example, generally, qualifying children under the age of 26 may not be dropped from their parents' insurance coverage). Other provisions are scheduled to go into effect in 2014.

For more information on these provisions of the Affordable Care Act, visit the government's website.