California LLC Group Insurance
Group Health Insurance for Limited Liability Companies, LLC's
LLC's
LLC's can be formed easily through the California Secretary of State's office. An
LLC is usually more expensive to establish than a partnership or sole proprietorship.
Also an LLC must pay an annual $800 dollar tax to the state of California to remain
viable entities every year. This is a large expense to many of our smaller business
clients.
Some groups may already have an existing LLC established. LLC's do not usually have
officers like corporations. Instead, they have members similar to partners in a
partnership. For insurance purposes, it is best if all prospective insured's appear
as members on the LLC. If they do not, then they must be on payroll and the most
recent calendar quarters DE-6 filing will be required to establish coverage. All
employees to be covered on an LLC must appear on payroll. Also, minimum participation
requirements will apply.
Forming an LLC for Insurance Purposes
If you do not already have your LLC established, there are some increased costs,
and delays associated with establishing an LLC for insurance purposes. The Articles
of organization showing all members, stamped and filed with the Secretary of State's
office must be submitted with the group health insurance application. It is not
uncommon for new Limited Liability Company's in California to wait for 2-6 weeks
to get back a stamped copy of their filing back from the Secretary of States office!
Also, many businesses choose to form their LLC out of state to avoid paying the
franchise tax board the $800 dollar annual tax. For example, you may have your LLC
formed as a Delaware company. This adds an additional requirement imposed by the
insurance carriers. If your LLC is organized in another state besides California,
you must establish a California business address, and get a certificate of good
standing from the California Secretary of State's office before you can qualify
for guaranteed issue group health insurance coverage. Again, as with many other
transactions handled through the California Secretary of State's office, to get
the certificate of good standing can take as long as 6 weeks!
To cut down the processing time, there are now many 3rd party vendors available
to "walk-in" requests to the Secretary of State's office in Sacramento. If you are
interested in getting expedited "walk-in" processing, please contact a licensed
agent at HealthInsurancePlus.com for assistance and a referral.
Minimum Participation Requirements
A common complication with both LLC's and corporations that sometimes comes up,
is when we are seeking coverage for the members of the LLC, and one or two employees,
but we do not have enough participation among all the employees to qualify. All
insurers require a certain level of participation, and valid waivers for groups
under 50 (fifty) employees. The best thing to do is to contact HealthInsurancePlus.com
and speak with a licensed small group insurance specialist to determine if participation
may be a concern for your business. We provide a free, no cost consultation as a
"business check-up". We can help you set up your business entity, and we can review
participation levels, and suggest strategies to reach the minimum acceptable participation
levels as required by the insurers.
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Small Business Group Insurance