The percentage of small businesses in the United States offering health benefits dropped from 47% in 2000 to 42% in 2009.

Note: None of this should be taken as legal or tax advice.

In July, 2010, the health reform bill created the Pre-Existing Condition Exclusion Plan (PCIP) to provide health insurance coverage to uninsurable citizens. Currently, 24 states (including District of Columbia) administer their own PCIP program. The federal government and HHS run the program on behalf of the remaining states.

Eligibility for PCIP is based on the following criteria:

• Legal citizen of the United States
• Uninsured for 6-months prior to application
• Denied an individual health insurance plan due to a pre-existing condition

State	Federal or State Run?	State Program Name (if applicable)	Additional PCIP Notes*
Alabama	Federal	N/A
Alaska	State	ACHIA-FED	$1500 deductible plan, rates from $468/mo (25 yr old) to $1310/mo (55 yr old)
Arizona	Federal	N/A
Arkansas	State	CHIP
California	State	California PCIP	$1500 deductible plan, rates from $180/mo (25 yr old) to $564/mo (55 yr old)
Colorado	State	GettingUSCovered	$2500 deductible plan, rates from $184/mo (25 yr old) to $486/mo (55 yr old)
Connecticut	State	CT PCIP Plan	$1250 deductible plan, rates from $285/mo (25 yr old) to $628/mo (55 yr old)
Delaware	Federal	N/A
District of Columbia	Federal	N/A
Florida	Federal	N/A
Georgia	Federal	N/A
Hawaii	Federal	N/A
Idaho	Federal	N/A
Illinois	State	IPXP	$2000 deductible plan, rates from $135/mo (25 yr old) to $368/mo (55 yr old)
Indiana	Federal	N/A
Iowa	State	HIPIOWA-FED	$1000 deductible plan, rates from $261/mo (25 yr old) to $435/mo (55 yr old)
Kansas	State	PCIP-KS	$2500 deductible plan, rates available via phone at 1-877-505-0511
Kentucky	Federal	N/A
Louisiana	Federal	N/A
Maine	State	DirigoChoice	Choice of three deductible amounts from $1250 - $2500
Maryland	State	MHIP	$1500 deductible plan, rates from $141/mo (under 30) to $354/mo (65 and over)
Massachusetts	Federal	N/A
Michigan	State	HIP Michigan	$1000 deductible plan, rates from $241/mo (25 yr old) to $563/mo (55 yr old)
Minnesota	Federal	N/A
Mississippi	Federal	N/A
Missouri	State	MHIP	Choice of three deductible amounts from $1000 - $5000 with plan rates from $271/mo (25 yr old) to $570/mo (55 yr old)
Montana	State	MAC Plan	$2500 deductible plan, rates from $219/mo (25 yr old) to $516/mo (55 yr old)
Nebraska	Federal	N/A
Nevada	Federal	N/A
New Hampshire	State	NHHP-FED	$1000, $2000, and $2500 deductible plan options, rates from $159/mo (25 yr old) to $520/mo (55 yr old)
New Jersey	State	NJ Protect	Several plan options with plan rates from $252/mo (25 yr old) to $440/mo (55 yr old)
New Mexico	State	NMMIP	$500, $1000, and $2000 deductible plan options, rates from $168/mo (25 yr old) to $409/mo (55 yr old)
New York	State	NY Bridge Plan	Zero deductible plan with standardized premium rates ranging from $362/mo to $421/mo, depending on geographic location
North Carolina	State	Inclusive Health	Choice of four deductible amounts from $1000 - $4500 with plan rates from $109/mo (25 yr old) to $276/mo (55 yr old)
North Dakota	Federal	N/A
Ohio	State	Ohio Risk Pool	Choice of $1500 or $2500 deductible amounts with plan rates from $130/mo (25 yr old) to $358/mo (55 yr old), depending on geographic location
Oklahoma	State	OHRP	$2000 deductible plan, rates from $137/mo (25 yr old) to $395/mo (55 yr old)
Oregon	State	Oregon Medical Insurance Pool	Choice of four deductible amounts from $500 - $1500 with plan rates from $266/mo (25 yr old) to $557/mo (55 yr old)
Pennsylvania	State	PA Fair Care	$1000 deductible plan, with average rate of $283/mo
Rhode Island	State	PCIPRI	$1000 deductible plan, with plan rates from $231/mo (25 yr old) to $520/mo (55 yr old)
South Carolina	Federal	N/A
South Dakota	State	SD Federal Risk Pool	$2000 deductible plan, with plan rates from $231/mo (25 yr old) to $535/mo (55 yr old)
Tennessee	Federal	N/A
Texas	Federal	N/A
Utah	State	Federal HIPUtah	Choice of four deductible amounts from $500 - $5000 with plan rates from $137/mo (25 yr old) to $271/mo (55 yr old)
Vermont	Federal	N/A
Virginia	Federal	N/A
Washington	State	PCIP-WA	Choice of $500 or $2500 deductible amounts with plan rates from $221/mo (25 yr old) to $606/mo (55 yr old)
West Virginia	Federal	N/A
Wisconsin	State	HIRSP-Federal	Choice of four deductible amounts from $500 - $3500 with plan rates from $113/mo (25 yr old) to $340/mo (55 yr old)
Wyoming	Federal	N/A

  
SRC:  Pre-Existing Condition Insurance Plan Website

Note: None of this should be taken as legal or tax advice.

Guaranteed issue health insurance refers to health insurance that does not involve the process of medical underwriting and must be provided to an eligible applicant regardless of the applicant’s age, gender, or any pre-existing health condition prior to enrollment. In five U.S. states (MA, ME, NY, NJ, VT) medical underwriting is not allowed - that is, all individual market insurance companies must provide guaranteed issue individual health insurance plans. In the remaining states, where medical underwriting is allowed in the individual market, the availability of guaranteed issue health insurance varies by state.

Effective January 1st, 2006, federal law (HIPAA) requires all states to provide guaranteed individual health plans to residents who meet certain eligibility criteria. Individuals who meet this criteria are commonly referred to as "HIPAA-eligible" (or "federally HIPAA-eligible") individuals. If an individual meets the federal definition of "HIPAA-eligible", then the state must provide that individual with guaranteed issue individual health insurance. Typically, states provide these plans through a state risk pool. However, some states transfer this responsibility to private insurance companies.
Most states go far beyond this federal mandate and offer guaranteed issue individual health insurance plans to all of their uninsurable residents.

1. employers often drop health benefits due to cost (and do not adopt tax favored vehicles), and
2. employees are forced to use after tax dollars to purchase individual health insurance (tax dollars go to the federal government vs remaining in the state economy).  

 As a result, state legislatures are being forced to modify these small group regulations.


According to Georgia Insurance Code Section 33-51-7:

§ 33-51-7. Health reimbursement arrangement only  (a) The Commissioner shall be authorized to allow health reimbursement arrangement only plans that encourage employer financial support of health insurance or health related expenses recognized under the rules of the federal Internal Revenue Service to be approved for sale in connection with or packaged with individual health insurance policies otherwise approved by the Commissioner. (b) Health reimbursement arrangement only plans that are not sold in connection with or packaged with individual health insurance policies shall not be considered insurance under this title. (c) Individual insurance policies offered or funded through health reimbursement arrangements shall not be considered employer sponsored or group coverage for purposes of this title, and nothing in this Code section shall be interpreted to require an insurer to offer an individual health insurance policy for sale in connection with or packaged with a health reimbursement arrangement or to accept premiums from health reimbursement arrangement plans for individual health insurance policies.

(Edited 1/31/11): Should the rest of us follow Georgia's lead?

Note: This should not be taken as tax or legal advice

HRAs, POPs and tax free individual health insurance are 100% allowed in North Carolina if administered the correct way.

Nothing in North Carolina insurance code restricts an employer (small or large) from offering HRAs and POPs that reimburse individual health insurance plans. HRAs and POPs are federal plans that are not regulated by the North Carolina Department of Insurance.

However, there exists confusion with regard to the state insurance code that regulates insurance companies insuring small employers (i.e. companies with 2-50 employees). It is important to realize that the insurance code applies to insurance companies and does not restrict a small employer from offering employees the ability to reimburse themselves for individual health insurance costs tax free.

According to North Carolina Insurance Code Section 58-50-115:

§ 58-50-115(a). Health benefit plans subject to Act. A health benefit plan is subject to this Act if it provides health benefits for small employers or self-employed individuals and if any of the following conditions are met: (1) Any part of the premiums or benefits is paid by a small employer or any covered individual is reimbursed, whether through wage or adjustments or otherwise, by a small employer for any portion of the  premium; (2) The health benefit plan is treated by the employer or any of the covered self-employed individuals as part of a plan or program for the purpose of sections 106, 125, or 162 of the United States Internal Revenue Code; or (3) The small employer or self-employed individuals have permitted payroll deductions for the eligible enrollees for the health benefit plans.

Individual policies reimbursed by ZanePOP cannot be made subject to the requirements of Section 58-50-115 because, with ZanePOP:

1. The employer does not pay a portion of the premium or benefits for the individual health insurance policy.
2. The employer does not reimburse the employee for any portion of the premium. 
3. The employer/employees do not treat specific individual health insurance plans as a part of a plan or program for purposes of Section 106, Section 125 or 162.
4. The employer never uses employee payroll deduction to pay for an individual health insurance policy.

The non-applicability of Section 58-50-115 to individual policies reimbursed by ZanePOP should be straightforward. Please post questions in the comment section.

Similarly, individual policies reimbursed by ZaneHRA cannot be made subject to the requirements of Section 58-50-115 because, with ZaneHRA:

1. The employer does not pay a portion of the premium or benefits for the individual health insurance policy;
2. The employer does not limit reimbursement to specific individual health insurance premiums and never knowingly or directly reimburses individual health insurance premiums;
3. The employer/employees do not treat specific individual health insurance plans as a part of a plan or program for purposes of Section 106, Section 125 or 162.
4. The employer never uses employee payroll deduction to pay for an individual health insurance policy.

The ZaneHRA itself is the "Plan", not the health care items reimbursed by the "Plan". In other words, ZaneHRAs are qualified ERISA- and HIPAA-compliant employee welfare benefit plans. However the medical items (e.g. pharmacy, insurance policy costs, doctor visits, etc.) for which each employee chooses to seek reimbursement from their ZaneHRA, are not part of an employee welfare benefit plan.

The federal government has guidelines for employers who want to allow insurers or their representatives access to their employees without triggering ERISA plan status and the associated liabilities. ZaneHRA is designed to comply with these guidelines.

Compliance includes the following restrictions on the actions of employers:

1. Employers must not be involved in employees' decision to purchase individual health insurance, or their decision on which insurer or plan to use. They must not get involved in any negotiations with an insurance carrier over price or benefits of individual health insurance plans, and must not provide employees with claim forms or other materials related to their individual health insurance policies.
2. Employers may not directly pay premiums on individual health insurance policies. They must not receive any compensation from an insurance carrier in connection with an employee's individual health insurance policy. Employers must not become involved in any claim dispute between an employee and an insurance carrier; all inquiries must be directed to the insurer.

To comply with point (1) above, while still making contributions to an HRA that can reimburse for individual health insurance premiums, employers must follow these additional guidelines:

1. Employers must not pressure employees to use the money in their HRA to pay for individual insurance coverage. Employers may require HRA participants to have health insurance coverage to participate in their HRA provided this requirement is waived for participants medically unqualified to obtain health insurance (e.g. rejected, uprated, excluded).
2. In addition to reimbursing for health insurance premiums, employers should also allow the use of HRA funds for qualified medical expenses.
3. Employers must limit their role to simply reimbursing qualified medical expenses as directed by the ZaneHRA plan.