Small employers in United States are protected by Federal Laws to the extent that no insurance company can deny you group coverage basing on the pre-existing condition of the group members. This process is called the “guaranteed issue” in United States.

Another provision of law that protects small employers in US is that insurance companies must renew the contract providing group coverage every year provided that there is no such premium default. They can only turn down your renewal of group health insurance if you have indulged in fraud or intentional misrepresentation or the employer has failed to comply with the terms and conditions laid down in the health insurance contracts.

There is however, an exclusionary clause where the small employer health insurance companies can deny coverage on the basis of the pre-existing conditions of the members in a group. Such denial can only be for a specified time span and not permanent. Under the Federal laws such look back period could be six to twelve months only. Moreover, the States have the discretion to reduce the time period under their own laws.

Such small insurance companies are also obliged to give small employers credit for prior coverage against any type of pre-existing condition if the employee has other insurance coverage. The coverage such employee has must be within 63 days of application for the new coverage.

Law in United States thus ensures that the small employers are not unduly deprived of the benefits of section 105 tax benefits.