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Individual Coverage
Even if your business doesn't offer a group plan, your employees might be able to obtain coverage on their own, as individuals. With individual coverage, insurers typically require a detailed medical history and sometimes a medical exam of the individual and any family members applying for coverage. The individual's rates will depend on his or her medical condition; in some cases, the insurer may exclude coverage for pre-existing conditions for up to 12 months. Individuals in less than perfect health may be denied coverage altogether.
Under California law, if small firms pay insurance carriers directly for any portion of their employees' coverage, then the insurance carrier is subject to specific rating rules and issue requirements. For all practical purposes, these rules make it impossible for an employer to directly pay for employees' individual coverage.
To explore the possibility of reimbursing your employees for the cost of premiums for individual coverage, consult a tax professional.
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