Problem: If an employer is headquartered in California, they must have at least one employee not related to the owner taking the healthcare to establish a group plan.
Modern day Startups are able to collaborate remotely across different states, presenting challenges to employers and employees under dated laws.
In California, Assembly Bill 1672 (AB 1672) has ushered a new era frustration for setting up your small group's employer sponsored health insurance.
Understanding the impact of this law is particularly crucial as more employees work remotely, expanding the geographical diversity of teams and creating novel obstacles for CA based companies to surmount.
Assembly Bill 1672
AB 1672 is a California law aimed at expanding access to group health insurance for small businesses. In essence, it stipulates that a small employer must have at least one employee, who is neither the owner nor a relative of the owner, to qualify for group health insurance. This requirement seeks to ensure broader access to health insurance, thus fostering healthier working environments.
The Challenge for Remote Workforce
Today’s increasingly remote workforce presents unique challenges for employers attempting to comply with AB 1672. The geographical dispersion means that more employees may not be operating within the jurisdiction of California, creating complications for companies trying to secure group health plans under this law.
In this rapidly evolving landscape, businesses that cannot meet the criteria set by AB 1672 due to their workforce's geographical spread may struggle to provide adequate health insurance coverage, potentially affecting employee satisfaction, retention, and overall company welfare.
How PEOs Fix It
Professional Employer Organizations (PEOs) emerge as the beacon of hope in this scenario, particularly for companies that may fall short on the requisite conditions due to the diverse locations of their remote workforce. PEOs co-employ the client company’s workers, allowing the small business to benefit from the PEO’s established human resources, payroll, benefits, and insurance services.
How PEOs Stay in Compliance and Offer Health Coverage
PEOs ensure that companies can provide comprehensive benefits and stay in compliance with state laws like AB 1672, even if they have employees scattered across various locations. By aligning with a PEO, companies can navigate the complex regulatory landscape efficiently, ensuring all employees receive equitable benefits irrespective of their geographical locations.
Why It's Affordable
Through the economies of scale, PEOs can offer a wider array of benefits and insurance options at competitive rates, often unattainable by small businesses independently. This not only aids in employee retention but also contributes to the financial health of the company.
Shifting the Benefit Administration Burden
By consolidating administrative tasks, PEOs liberate companies from the intricate web of benefits administration, allowing them to focus on core business activities, strategic growth, and fostering innovation.
Final Thoughts
As remote working continues to redefine the professional landscape, companies must adapt and innovate to overcome the challenges presented by laws like AB 1672 in California. Professional Employer Organizations stand out as an indispensable ally for small businesses striving to navigate the complexities of insurance compliance and employee benefits in today’s decentralized work environment.
Remember to stay informed and consult with a licensed insurance broker or a legal advisor to understand the intricate details of AB 1672 and explore how a PEO can cater to your unique business needs in the evolving world of work.
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