The small group Special Enrollment Period (SEP) is a once-a-year window when it’s easier for small businesses to offer group health insurance to employees. That’s because during this one-month period:
Your business does not have to contribute to the premiums; and
Only one employee needs to enroll to establish your group health plan.
This means companies in the small group market can offer health coverage without spending any money.
It also means your employees can get access to employer-sponsored healthcare. This allows them to use pre-tax payroll deductions to pay for their premiums (as long as you have a cafeteria plan set up) and gives them access to the larger doctor and hospital networks normally associated with group coverage.
It’s similar to offering a 401(k) without a company match—but at zero cost. Employees pay for everything using their own money, but they save a ton because they aren’t paying taxes on their contributions.
This contrasts with the rest of the year, including during open enrollment, when group health insurance plans come with additional requirements. Usually, there are:
Minimum contribution rules, which require employers to contribute a certain amount to the cost of the plan; and/or
Minimum participation rules require a certain percentage of employees to enroll in the health insurance plan.
For example, in some states, health insurers can decline you for group coverage if fewer than 70% of your employees elect to have the coverage. (If an employee has other health coverage, like through a spouse’s plan, they’re not included in this calculation.)
That’s why the Affordable Care Act created the small group SEP to relax the eligibility requirements and allow you to skirt around these requirements.
Small Group Special Enrollment Period, Explained
Small group SEP versus standard special enrollment period
A small group SEP is for employers looking to get group health insurance coverage for their employees. A regular special enrollment period, on the other hand, is for employees who didn’t get health insurance during the open enrollment period.
You can only enroll in a private health plan outside of the open enrollment period if you qualify for a special enrollment period. Factors that might qualify you include:
Qualifying life events, like a loss of coverage, getting married, having a baby, or moving to a new zip code
Getting a newly eligible immigration status
Experiencing a serious medical event, natural disaster, or other state-level emergency that kept you from enrolling on time
When is the small group Special Enrollment Period?
The small group SEP takes place annually, and it’s for coverage that kicks in on January 1. Employers that use Gusto need to confirm by November 15 if they’ll be offering this coverage to employees. So if you want to offer health insurance benefits to your team under this small group SEP, make sure to chat with your broker ahead of time.
During the enrollment period, the participation and contribution minimums that usually apply can’t be enforced.
Anything else I should keep in mind?
While the small group SEP allows you to set up group health coverage without meeting the regular contribution and participation requirements, remember that:
You can always contribute to your employees’ premiums if you want, and you can choose how much you want to contribute.
Employees can choose to waive group coverage and get health insurance through the individual market or elsewhere instead.
Keep in mind that the amount you choose to contribute to premiums may impact whether your employees can get health insurance subsidies if they choose to waive group coverage and shop in the individual health insurance marketplace instead. This is nuanced, however, so you should review it with your broker before deciding on any specific contribution amount for your team.
When does the Small Group SEP occur (dates)?
The Small Group SEP usually occurs between November 15 and December 15.
What qualifies a business for the Small Group SEP?
Your business qualifies for the Small Group SEP if you have at least one full-time employee but fewer than 51 full-time employees. However, in some states, businesses can qualify for a small group SEP as long as they have no more than 100 full-time employees.
Are there relaxed contribution or participation rules during the Small Group SEP?
Yes—that’s the purpose of the Small Group SEP. During this time, you can establish group health coverage without having to meet minimum contribution and participation requirements. That means you don’t have to pay a portion of employee premiums during the SEP, nor do you have to get a certain number of employees to enroll in order to issue coverage.
Does the Small Group SEP apply to all insurance carriers?
Yes, under the ACA, all insurance carriers have to offer a special enrollment period to businesses.
What happens if a business misses the Small Group SEP window?
There’s no wiggle room if your business misses the Small Group SEP window. You can still get group health insurance coverage for your employees, but you’ll be subject to the regular contribution and employee participation rules. If, for some reason, you can’t offer group health insurance coverage, you still have other insurance options, including health reimbursement arrangements (HRAs), like a qualified small employer health reimbursement arrangement (QSEHRA).
Quick note: This is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.
