California Choice (CalChoice)

California Choice. Your Health. Your Choice, offered by BenefitsCafe.com

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CalChoice describes itself as an “exchange,” but “bundler” is a more accurate description.  An exchange conjures images of the New York Stock Exchange or the Chicago Mercantile Exchange, where buyers meet sellers and the prices fluctuate based on demand. That doesn’t happen in CalChoice (nor at California state’s “exchange,” Covered California for Small Business). At CalChoice, health insurance companies set the price of coverage based on the age of the enrollee and the plan that they select — the exact same way all other insurance companies set their rates.

CalChoice does give an employer the freedom to offer many different insurance companies at one time. A small employer can offer plans from these state-wide insurance companies:

  • Kaiser
  • Anthem Blue Cross
  • United Health Care
  • Health Net

Plus a few regional ones:

  • Sutter Health Plans (Northern California)
  • Western Health Advantage (Sacramento area)
  • Sharp Health Plans (San Diego area)
  • Oscar Health (Southern California)

An employer will receive one invoice from CalChoice and some employees can enroll in a Kaiser HMO plan, others in an Anthem PPO plan and still others in HMO plans from United Health Care (UHC). In this way, CalChoice bundles plans from many insurance companies.

Strengths

Kaiser HMO & Anthem PPO Combo: CalChoice is a good option for companies that want to offer employees a Kaiser HMO and an Anthem Blue Cross PPO plan.  Outside of CalChoice it is difficult for a small employer to meet the underwriting guidelines of an insurance company when the employer wants to offer Kaiser alongside another insurance company’s PPO. CalChoice solves that problem.  Note, however, that the CalChoice Anthem PPO plan uses the “Advantage” network which is different from the “Prudent Buyer” PPO network which Anthem offers its small employers that enroll directly with Anthem.   (See the section on “Challenges” below for more information on the difference between these two networks.

Ancillary Benefits:  Another strength of CalChoice is that they make it easy to offer dental, vision, chiropractic, acupuncture and life insurance, or “ancillary benefits.” Their employee worksheets show the costs and benefits of voluntary (i.e., employee paid) or employer paid plans. CalChoice also includes a no-cost discount dental and vision plan with their medical plans. This added benefit helps employees, particularly low-wage employees, who have few opportunities to get dental and vision coverage.

Challenges

Strict Underwriting Guidelines:  CalChoice’s strength of offering many different insurance companies is also one of its weaknesses. They must follow the guidelines of each separate company so they have little leeway when it comes to qualifying your employer group.  For example, outside of CalChoice some companies require only 25 or 30 percent of the employees to participate in an employer’s plan.  CalChoice requires 70 percent participation.

Limited PPO Full Network Options:  Only Anthem Blue Cross offers PPO plans in CalChoice – Health Net and United Health Care only offer HMO plans.  Typically, people who select a PPO plan want to access the largest network of doctors and hospitals.  Anthem only offers a single Gold or Silver PPO plan with the Prudent Buyer network. CalChoice does not offer Platinum or Bronze level full network PPO plans.

One must choose a PPO plan carefully because Anthem offers other PPO plans that use the “Select” network, which has fewer doctors and hospitals.  As CalChoice says: “The Select PPO Network is a subset of the physicians who are also participating providers in Prudent Buyer PPO… The Select PPO network provides access to more than 40,000 California doctors and specialists, and more than 300 hospitals. Prudent Buyer PPO physicians who are not in the Select PPO network are considered out of network for Select PPO.” So, choose your plans wisely, which the professional staff at BenefitsCafe.com can assist you with.  Give us a call (800)746-0045

Too Many Choices Can Confuse Employees: CalChoice offers many plans with many provider networks from many insurance companies.  This added up to a lot of choices for employees, who may become overwhelmed.  At Benefits Café, we can assist you with communicating the information to your employees.

Separate Admin Fee:  CalChoice charges groups $30 or $50 per month as a separate administrative fee. Your rate depends on the number of employees you enroll. The admin fee does not appear on any of the quotes you’ll get, however it will appear on your invoice.  It’s a hidden charge that upsets some people.

Pricing and Employer Strategy

Competitive Pricing:  Many of the plans CalChoice offers have different benefits than the plans available directly from the participating companies, so an apples-to-apples comparison is a bit difficult. CalChoice is competitive in some instances and not in others, so the best option is to get a quote to see how it looks for your company. CalChoice is very competitive when you factor in the extra features included in CalChoice medical plans. Also, employees seem to appreciate the extra benefits such as discounts on tickets to movies and major league baseball games, in addition to discount dental and vision plans.

Kaiser HMO & Anthem PPO Combo:  As mentioned in the “strengths” section, CalChoice is a good option for companies that want to offer employees a Kaiser HMO and an Anthem Blue Cross PPO plan.

California Choice (CalChoice) Small Business Health Insurance FAQ

Do small businesses have to offer health insurance in California?

No, there is no federal or state law that requires small businesses in California to offer group medical insurance.  However, if your company has 50 or more “full time equivalent” employees (where two part-timers equal one full-time employee) then you must pay a tax penalty to the IRS if you don’t offer “affordable coverage with the minimum essential benefits.”

There is, however, a requirement that every resident of California have medical insurance or pay a penalty.  The California individual medical insurance mandate  imposes a penalty of up to 2.5% of income on any Californian who doesn’t have health insurance.  This means that if your company doesn’t offer medical insurance to your employees, all your employees are paying for it on their own with after tax dollars.  Because of the “individual mandate,” your employees are probably very aware of health insurance, and it is likely important to them.  Even if your company pays the minimum amount (50%) towards an employee’s medical insurance, the employee can pay their portion on a before tax basis and save money. Medical insurance is also a fully deductible business expense for a company and not taxable as income to your employees.  The tax benefits of group medical insurance are a major reason many employees offer coverage even though it is not required.

Small businesses with 1 – 100 employees in California are fortunate that there is a very competitive market for employer-sponsored medical insurance and seven insurance companies and two “exchanges” or bundlers, offer coverage.  So, employers have a large selection of plan types and benefit levels.

What is Cal Choice Medical?

California Choice offers group medical insurance from many different insurance companies including Anthem Blue Cross, UnitedHealth Care, Health Net, Kaiser and others and an employer receives one invoice with all the insurance companies combined.  CalChoice refers to itself as an “exchange” however it is more of a “bundler” where you can choose many different insurance companies at one time.  An exchange, like the stock exchange, offers different prices based on demand.  The rates for California Choice medical insurance is fixed to the rates filed by insurance companies and approved by the State of California Department of Managed Health Care or the California Department of Insurance.  The rates are based on the location of your business, the ages of each employee and dependent spouse and child enrolled, and, the type of plan you select.  It can be overwhelming. You can call us at Benefits Café and we can help you select plans, set everything up and make sure that it works the way its supposed to work. Best of all, there is no charge for our services.  You pay the identical amount whether you enroll directly with an insurance company, or, if we help. Give us a call at (800)746-0045.

What is the minimum employer contribution for health insurance in California?

Employers must contribute a minimum of 50 percent of the employee-only premium for group medical insurance in California.  However, a few companies allow small employers to contribute a fixed amount as low as $100 per employee per month.  See page 4 of the Rules of California Small Business Medical Insurance for a list of which companies allow the lower amount.  CalChoice, Covered California for Small Business (CCSB), Kaiser and CIGNA+ Oscar don’t allow the fixed amount.  Also, remember that the less an employer contributes towards an employee’s medical insurance, the more the employee must pay. So, if you’re considering offering coverage as an incentive to attract and retain employees, you may want to contribute more than the minimum.  Paying a percentage of the employee-only premium to a “sponsored” plan is a very popular form of employer contribution.   Give us a call (800)746-0045 and we can help you figure out a good strategy for your company and your employees. 

Will Cal Choice save my business money?

It depends on what you compare the price of Cal Choice medical insurance to.  If you compare the CalChoice premium to the higher wages that an employer must pay to get employees when not offering medical insurance, then CalChoice will save you money. When comparing the cost or “premium” of medical insurance through CalChoice with the premium of enrolling directly through other insurance companies then it is about the same rate.  The Kaiser plans offered through CalChoice have the identical benefits and rates as offered directly through Kaiser. The other insurance companies, Anthem Blue Cross, Health Net, United Health Care and others, offer different plans in CalChoice than they offer directly.  The rates and benefits are comparable. Cal Choice also charges a $30 – $50 administration fee that is in addition to the premium shown in any quote. So, in that way CalChoice is a bit more expensive.  Call Benefits Café (800)746-0045 and we can help you figure it out.

Can any employee be denied health coverage due to health conditions?

No, the Affordable Care Act (ACA, Obama Care) and California law specifically prohibit insurance companies from asking medical history questions for small business employers with 1 to 100 employees in California.  So, employees and dependents with serious medical conditions can’t be denied coverage.  For more information, see the Rules of California Small Business Health Insurance.   If your company has more than 100 employees then the insurance companies can ask about pre-existing medical conditions and can raise the rates for the entire company.  It’s blatantly unfair, but those are the rules. Give us a call at (800)746-0045 if you would like us to help you set up a group medical insurance plan for your employees.

Can employer group be canceled because of too many employee claims?

Insurance companies cannot cancel coverage because of too many claims if you have group medical insurance in California and you have fewer than 100 employees. For more information, see the Rules of California Small Business Health Insurance.

If you have more than 100 employees, then insurance companies can increase the cost or “premium” for groups that have high claims. Officially, the insurance companies can’t cancel your coverage but they can raise the premium astronomically, e.g., a 30 – 50 percent increase, when the plan renews.  Such an increase may effectively make medical insurance for the entire group too expensive to continue.  If you find your company in this situation, you should use a knowledgeable broker, like Benefits Café (800)746-0045, who can negotiate with the insurance company on your behalf and try to reduce a large renewal increase.

Will employer and employees be able to keep current doctors?

Keeping current doctors depends on which doctors employers and employees are trying to keep. Each California medical insurance company has contracts with specific groups of doctors and hospitals. The contracted medical providers are “in-network” for a specific medical plan.  The network varies depending on whether it is a PPO (Preferred Provider Organization) plan, HMO (Health Maintenance Organization) or an EPO (Exclusive Provider Organization).  PPO plans will pay for services from non-contracted doctors or “out-of-network” providers.  HMOs and EPOs won’t pay for medical services from out-of-network providers.

Further complicating matters is the fact that each insurance company offers different medical provider networks within each plan type. For example, Anthem Blue Cross offers the Prudent Buyer PPO network which is the largest and offers the most doctors and hospitals.  Anthem also offers the Select PPO network which has fewer medical providers.  Blue Shield of California offers their full network PPO and the Tandem (smaller) PPO network. UnitedHealth Care (UHC) offers Select Plus PPO (largest network) and the smaller Core PPO network.

The same craziness applies to HMO plans which include:

Anthem California Care and Select networks;

Blue Shield Access Plus, Local Access Plus, and Trio networks;

Health Net Full, Whole Care, Community Care, Smart Care and Salud HMO networks;

UHC Signature Value, Alliance and Harmony networks.

Kaiser is the easiest because they only offer one HMO network.

The best way to determine whether your doctor is in the network, is to work with an agent / broker, such as Benefits Café (800)746-0045 and we can help you figure it out.

Is out-of-state coverage available for California employees?

Yes. Employees who live outside of California can be covered on your group medical insurance plan, however, they can only enroll in a PPO plan.  The out-of-state employee have access to providers who are in- and out-of-network in their state.  Out-of-State employees with small businesses that offer Anthem Blue Cross of California or Blue Shield of California medical insurance plans will use the PPO network of the Blue Cross Blue Shield Association PPO network.  Other insurance companies such as UnitedHealth Care and Aetna have national networks of providers.  The out-of-state employees will have the exact same benefits as the employees in California.

No California insurance company offers HMO plans to out-of-state employees of small businesses.  HMO’s require specific contracts with medical groups and the payment is entirely different from PPOs (it’s the difference between “capitation” and “fee for service” if you’re a policy wonk.)  It’s too difficult for insurance companies to set up HMO contracts in every state outside of California, so they just offer PPO plans.

How does Benefits Café help me obtain the best small business health plan for my business?

Benefits Café staff have very deep knowledge of the California small business medical insurance market and can help guide you through the complicated process.  There is no added cost for our services.  You pay the exact same rate for small group medical insurance as if you enroll directly with any insurance company.  The value we bring is in our concierge level service that helps to educate and empower you. We also want long-term clients so we help you and your employees anytime there is a problem.

The staff at Benefits Café are licensed insurance agents with the State of California and have decades of experience assisting small businesses set up and maintain group medical insurance plans.  Our process to assist small businesses begins with a discussion about the nature of your business, the type of employees you have and your company’s and employee’s expectations for their medical insurance.

Everyone wants the best benefits at the lowest cost. But not everyone wants the same thing.

  • Some employees want to stay with their current doctors;
  • Others want the lowest cost plan because they never get sick;
  • Others may want to start a family and want very good coverage;
  • Still others may have a chronic illness that requires expensive medicine.

Employers want different things also, including:

  • Saving on payroll taxes and worker’s comp premium;
  • Attracting and retaining great employees;
  • Spending as little money as possible; and,
  • Offering comprehensive benefits while staying within a budget.

Benefits Café will help you determine the factors that are the most important to you and your employees.  Then, we will prepare a proposal that shows plans that are available from all the insurance companies that may work for you.  This may include PPO, HMO, HSA plans, with Platinum, Gold, Silver, and Bronze level benefits.  The proposal may include full network plans which have the most number of doctors and hospitals, or “narrow” network plans with fewer medical providers but at a lower cost.

We’ll talk to you about ways to share the cost with your employees that helps both the older, more experienced employees, for whom medical insurance is more expensive, and younger employees and their families.

Once you decide on the plans that will work the best for your company, we help you explain everything to your employees; enroll everyone and support your plan throughout the life of your coverage.  We have clients for whom we have worked for nearly three decades. Give us a call at (800) 746-0045.

What does California Choice Defined Contribution mean?

California Choice offers group medical insurance from a number of different insurance companies including Anthem Blue Cross, UnitedHealth Care, Health Net, Kaiser and others and an employer receives one invoice with all of the insurance companies combined.  “Defined Contribution” refers to the amount that an employer contributes towards an employee’s group medical insurance plan.  CalChoice (and most other insurance companies) allows two types of defined contribution.

  • An employer can either contribute a fixed dollar amount, such as $200, $300, $500 per month towards an employee’s medical insurance plan and employees can apply that amount to the plan that best fits their needs, or,
  • An employer can “sponsor” a specific plan, such as the Silver Kaiser HMO A plan, and allow employees to “buy up” to a more expensive plan.An employer could pay 100% of the employee only premium for the sponsored plan, or 90%, 75% or 50% (which is the least amount allowed.)

Sponsoring a specific plan through a defined contribution arrangement is probably the best way for an employer to contribute towards employees’ medical insurance because it accounts for the different cost of medical insurance for older employees and dependents.  Older employees may be more valuable because of their experience and skill.  If an employer contributes a fixed dollar amount, then that money won’t go as far for an older employee because their premium is higher.  The fixed amount will help the younger employees more because their medical insurance plans are less expensive due to their young age.  Many employers find that it makes more sense to balance out the contribution formula by paying a specific percentage of the premium by sponsoring a plan. CalChoice allow this.

Can employers offer Dental, Vision, Chiro, and Life to employees?

Yes, CalChoice makes it very easy to bundle dental, vision, chiropractic and life insurance with the group medical plans.  The CalChoice medical plans include a discount dental plan, that isn’t insurance but it enables enrollees to obtain discounts on dental services.  CalChoice also offers dental PPO and dental HMO plan.

CalChoice offers two “voluntary” vision plans which means that the employees pay 100% of the cost of coverage.  By setting up a Section 125, Premium Only Plan (POP), employees can pay for the vision plan on a before tax basis, which will save them money.

CalChoice also offers a chiropractic only plan and a plan that includes both chiropractic and acupuncture services through Landmark Health plan. Enrollees must use a chiropractor or acupuncturist who participates in the Landmark Health provider network.

California Choice even has an option to add a herbal therapy plan. According to CalChoice’s proposal this benefit plan includes “oral ingestion or external application of naturally occurring botanical, animal, or mineral substances, to support normal structure and function of the human body according to the principles of traditional Oriental medicine.”

Does California Choice work with the small business that has a small budget?

Yes, CalChoice works with small employers that have small budgets.  They offer some very inexpensive medical insurance plans and with the help of an experienced broker/agent, such as the staff at BenefitsCafe.com, it is possible to set up a plan that helps employees and meets your budget.  Give us a call at (800)746-0045.

How do I get a quote for California Choice insurance for my business?

The easiest and fastest way to get a quote for CalChoice is to contact BenefitsCafe.com, (800)746-0045.We will need a census of your employees and dependents which lists each person’s date of birth and home zip code.  We’ll also need information on the location of your business because the rates are based on the location of the business, the ages of the employees and family members, and the type of benefits in the plans you want.  We can help you figure out the best plans for your employees and your budget. We can also help you figure out how to share the cost of medical insurance with your employees. Best of all, there is no charge for our services.

Can an insurance broker advise me on California Choice for my  business?

Yes, a broker/agent can advise you on setting up a group medical insurance plan with CalChoice.  In the small group market in California, which includes companies with 1 to 100 employees, there is no additional cost for a broker/agent to assist you. You pay the identical rates for coverage with and without the assistance of a broker.  You should find an agent or broker who knows small group medical insurance very well, because there are many nuances to coverage that many agents and brokers who don’t do this on a regular basis will miss.  For example, CalChoice offers plans from UnitedHealthCare, Anthem Blue Cross, Health Net and others. Many of the medical insurance plans have identical benefits however some plans are called Signature, Alliance, and Harmony, Prudent Buyer, and Select.  If your broker doesn’t know what these terms mean, you could be in for a big surprise when you use your plan and discover that very few doctors and hospitals accept the coverage. We think that we, at BenefitsCafe.com, offer excellent advice and assistance. Just give us a call at 800-746-0045 and we can help you understand and enroll with CalChoice.