Sole Proprietorships
As a sole proprietor, you are eligible to form a guranateed issue small group health
insurance plan. We specialize in setting up guaranteed issue small group health
insurance for Sole Proprietorships and small business owners.
Employment Requirements
There are several steps required to qualify in California for guaranteed issue.
First, you must insure at least two adults on coverage. You will need at least one
active employee besides the owner. The most common situation we encounter is where
the spouse of the business owner is acting as an employee, but is not on W-2 payroll.
With a sole proprietorship an employee must appear on W-2 payroll.
For many very small businesses, this is a difficult hurdle to overcome. If the employee
is actually a family member who is also going to be covered, it may make more sense
setting up a partnership. In other cases, if payroll is not handled properly, or
the sole proprietorship only uses 1099 independent contractors it may be difficult
for the business entity to qualify for guaranteed issue group health insurance.
For that reason, partnerships are far more common for small businesses setting up
coverage for 2-3 people.
DE-6 Form
However, if the business is a sole proprietorship with at least one W-2 employee,
keep in mind it is not the actual W-2 that is required by most insurance carriers
to prove employment. Rather, it is a filed DE-6 form with the California EDD (Employment
Development Department). A properly filed DE-6 with a valid EDD number is what the
insurance companies are looking for to prove employment. A copy of the most recent
quarterly certified DE-6 filing with the state showing the employee to be covered
assists in establishing group health coverage. Very rarely will a carrier accept
just pay stub or W-2 in lieu of a filed DE-6. The requirement of a payroll and DE-6
filing increases the expense of setting up a sole proprietorship for health insurance
purposes.
Your EIN Number
An additional requirement for a sole proprietorship is an EIN number from the IRS.
Even though a sole proprietor may not need an EIN for other purposes, one is going
to be required to qualify for small group health insurance. A HealthInsurancePlus.com
licensed agent can assist a qualifying sole proprietorship in filing and receiving
a valid EIN number at no cost to you, our customer. Many times, we can have the
EIN number for you within 24 hours! However, some carriers may require the actual
confirmation letter from the IRS of the newly qualifying business entity before
they will issue under the guaranteed acceptability guidelines. So applying for the
EIN early is an important step. In many cases it can take 2 to 3 weeks or more to
get this letter from the IRS.
Contact HealthInsurancePlus.com to get started today!
If you are a sole proprietor seeking group health coverage, contact one of our licensed
agents at HealthInsurancePlus.com to discuss your options in greater detail. Our
services are completely free to you!
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Small Business Group Insurance