One-person group: Not an oxymoron in new WA health care law

In a step forward for self-employed people seeking health insurance, Washington state legislators have redefined the meaning of the word “group.” According to the Washington state insurance commissioner’s blog, starting on Oct. 1, 2010, people who operate one-person businesses will be considered a “group” for insurance purposes. This change means that sole-proprietors will be able to quality for group coverage.

It’s a big change from health-insurance business as usual, and one that is long overdue–not just in WA, but everywhere.  Under Washington state law in recent years, “small-group” coverage applied to businesses with 2 to 50 employees. Under the old rules, small groups could qualify for health coverage without health screenings. But one-person businesses were left out, meaning that they had to buy their insurance in the individual market, where health screening is the norm and coverage can be hard to find and expensive for people with pre-existing medical conditions.

Washington state’s new law puts it in a small group of its own: states that allow one-man groups. The 2-to-50-employee definition of a group is the norm in most states. If you’re self-employed with no other workers, only Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Maine and Mississippi—and now Washington give you the option of getting health insurance as a one-person group. Even in some of those states, you’re still excluded if you have pre-existing medical conditions, or if you’re not incorporated. And in some, “yes” really means “maybe,” because of some arcane regulations.

Of course, you can’t just go out and declare yourself to be a one-person business just to get into the new deal. Provisions in the new law requires people to show that:

They’ve been employed (or run) the same small employer for at least the last 12 months;
They’ve made at least 75 percent of their income (or 51 percent for agricultural businesses) from the business or trade.

Similar changes to federal law have been approved by Congress and signed by the president — they’re included in the federal health reform legislation passed this spring — but don’t take effect until 2014. So, kudos to Washington state and that handful of other for jumping in and not waiting.

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