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Understanding California Senate Bill (SB) 1375: New state law changes the definition of small employer and employee

March 2019

California Senate Bill (SB) 1375 stops Californians from purchasing health plans that offer fewer benefits and protections than those that comply with the Affordable Care Act (ACA or also known as Obamacare).

This new state law changes the definition of “eligibility” for small employer health plans and employees and prevents small businesses and self-employed individuals with no employees from enrolling in a group health plan. The law prohibits employer group plans from being issued, marketed, or sold to a sole proprietorship or partnership (and their spouses), without eligible “common law” employees.  What is more important is these are prohibited through any arrangements including an offering through an association.

Therefore, the newly signed legislation will prohibit the formation of new “association health plans” in California. Certain association health plans did receive exemptions from the new law.

It also means that only individual health plans can be sold to any entity without employees, and individuals must purchase health coverage in the individual market if they wish to obtain health insurance.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor if different, the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.

This publication is posted on the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. Readers should always seek professional advice before entering into any commitments.