Out of State Employees Health Insurance

So you have an employee that you want to keep and is moving out of state. Or – you have an employee you want to hire that is out of state. How do you get an Out of State Employee Health Insurance? What are the rules? How does it work?

Okay, so it’s difficult – but not really. It’s especially not difficult if you can (and do) take the advise I give to all of my group clients. And that advise is this:

Every employer should have a PPO health plan available even if no one wants it. Also, when it is possible, all employers should have an HMO and a PPO option. This question – “how do I give my out of state employee health insurance?” – is one of the reasons why I say that.

More and more every year, technology makes distances blur, so it’s important to know what to do if you have an employee that needs to be out of state for whatever reason. More and more companies are also crossing state lines and building offices and locations in neighboring states.

Networks and Out Of State Employees

HMOs are a poor model for out-of-state employees as the best you could hope for is that they only have coverage for medical emergencies. That’s assuming the carrier allows out of state employees to enroll at all. That’s not a good place for your employees to be in. This would be the case for HMO plans like Kaiser Permanente, Western Health Advantage , Sutter Health Plus, etc.

I should note that Kaiser does have PPO options that you could consider adding, but they tend to be fairly expensive when looking at alternatives.

So your best bet is that PPO option I said you should have. Why? Because most PPOs have nationwide networks. Blue Shield is a particularly good example of this because of the Blue Card program. The Blue Card program allows members of Blue Shield to jump into the networks of Blue Cross/Blue Shield providers of other states while they are residing or travelling there.

What that means if that if you have an employee in Washington, they can enroll in your Blue Shield of California PPO and use Blue Cross/Blue Shield of Washington healthcare providers as an in-network service.

If you’re a large enough employer (51+ employees in California,) you can also look at level-funded or self-funded PPOs so you can lease large nationwide networks like Multiplan or First Health.

Still Don’t Think You Should Have PPO Health Insurance for Out of State Employees?

Consider this case study from one of my clients. In fact, the very reason that inspired me to make this post.

A small group client of mine did not heed my advice to have a PPO option as a “ghost plan” (A plan that is available to the group, although no one enrolls in it.) No one wanted the PPO plan because it costed more, so the group’s administrative contact told me not to make it available to anyone at their renewal.

Fast forward about a half-year later.

I catch wind of an employee that is leaving the company. It’s not all that uncommon as I typically do the benefit administration for all of my group clients. I was being advised that an employee was leaving the company because they needed to be removed from the group’s health plan.

I do as I usually do and reach out to the employee. I don’t often get the details of what happened, so I like to call or email employees as they exit a company. It’s good to have a conversation about what their options are (COBRA, enrolling in an individual plan, Medi-Cal, etc.) It can be a confusing time for a lot of people, so I do my best to make the change into a smooth transition for everyone.

Anyway, she told me she was leaving the company because she head to move her family “back home” to Arizona to take care of her ill mother-in-law. After hearing this, I asked her if I could call her back later. I wanted to get more information available.

Here’s the thing. I recognized the employee by name. She was with the company a long time so I figured she must have been valuable. I called the group’s contact and asked her if it’d be possible for the exiting employee to work remotely instead. The answer I received nearly blew my mind.

The only reason the employee was leaving the company was because she wouldn’t have health insurance unless she took a job offer from an employer in Arizona. Remember, health insurance benefits is the second most important thing an employer can offer to an employee.

Long story short, we were able to add a PPO option for the employee. It took an underwriting exception and an appeal to get it down, but we got it done. The employee was able to go to Arizona with her family and keep her job. The employer avoided losing a valuable employee and didn’t have to pay any additional premiums out of their pocket for it by keeping the same contribution level and letting the employee pay the difference.

There are two lessons to be learned, here. 1) If they had a PPO option available in the first place, this whole fiasco could have been avoided and 2) you, as an employer, should be in consistent contact with your broker about your human resources needs. A good broker is a natural problem-solver and will thrive on overcoming obstacles.

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