New law widens cafeteria plan eligibility

New Hampshire businesses that do not or cannot offer full-fledged health insurance or a full-fledged cafeteria plan now have another alternative – a health care-only cafeteria plan – thanks to a bill that went into effect last Friday.The bill, Senate Bill 390, allows small employers with two or more employees to establish such plans (identified on the paycheck as Section 125), which is simpler than offering their own health insurance plan. This way the worker – not the company – goes out and buys insurance and then pays though it with pretax payroll deductions.”An employer doesn’t have to carry all the responsibility of finding insurance,” said state Rep. Jill Hammond, D-Peterborough, and a supporter of the bill.The law also requires that insurance companies sell employees insurance under the small group rate of one, which is still the most expensive group rate, but still is guarantee-issued, and is generally cheaper than an individual plan.Employers have offered Section 125 cafeteria plans to pay for medical expenses not covered by health insurance as well as day care, but this would be for health insurance premiums only.Employers can contribute to the plans if they like, but they don’t have to. Workers can take advantage of the plans if their employers don’t offer health insurance already, or at least, not to them because they are not full time (though the bill requires that workers need to work at least 15 hours a week to be eligible).But while the bill has taken effect, it doesn’t mean that companies and workers can start taking advantage of it tomorrow.Employers can start setting up a plan, and if in place by October’s open enrollment period, workers could sign up in a little over a month.”There are a lot of working people without health insurance,” said Leslie Ludtke, health policy analyst at the New Hampshire Department of Insurance. “This is just another alternative to help get them covered.” – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW