As someone else has said, the laws are different in every State. Some States have an insurance pool for small businesses (between 2 & 25 employees). These States typically have a list of insurers that participate in the pool. If I recall correctly, each of these insurers must provide the same types of coverage. Once an insurance carrier, and the type of insurance coverage is selected, the business makes application. Once the application is made, the insurer tests the business for viability. This test may include the need to submit to them financial statement for the company and/or income tax returns for the business and/or its employees. (In the States with which I'm familiar, you can't just start a business and immediately get small business health insurance. Connecticut may be an exception.) Only after they determine the business is viable, based on State established guidelines, must the insurer issue a policy.
Although this is only speculation, my guess is this viability test is probably scrutinized less for two healthy 25 year olds starting some dot com business, than it may be for two fifty somethings, one of whom they learned in the application has had OHS. If the business passes the test, and a policy is issued, and one of the employees has been continuously insured via COBRA, that person is eligible for coverage from the small business without exclusion for pre-existing conditions (HIPPA).
As an aside, even though the business is accepted into the small business pool, the cost of the premiums may be a jaw dropper.
I did what you are considering @ 1995?. When I started I considered the premiums somewhat reasonable, even with a gold plated policy. My small business, by most standards, was fairly successful. By 2002 -2003 the premiums for my wife (the other employee in the business) and I started creeping up towards ~ $30,000./yr. (Although it's a pool, the premiums were still age adjusted.) This premium cost did not include co-pays or deductibles. The business viability testing had become a yearly event at renewal time. So, in addition to the cost of premiums, we were incurring the additional costs of CPA's and our own time to satisfy the insurer, which was obviously attempting to get us to drop their policy. (Interestingly, the CPA company (~15 employees) we were using was under the same scrutiny. They were forced to pass on most of the premium increases to the employees.) We eventually dropped the policy.
My wife got a part time job as a Pharmacy Technician for a large grocery chain. She works two ten hour days per week. She worked there for six months before she was eligible for insurance benefits. Once she received them, instead of the cost of virtual self-insuring, we cancelled our business health insurance policy, and calculated the true worth of her part time salary to be about $45,000./year.
While I must admit our business health insurance policy was an excellent one, the policy she receives at her job is almost as good. Any differences in costs are made up easily by the actual salary she receives. Perhaps of interest, about one year following her receipt of benefits, her policy paid for my second OHS, without a hitch. My only regret is that my former business health insurer, to whom we had paid tens of thousands of dollars in premiums without any significant claims, got off the hook.
If I recall correctly, I may echo the sentiments of some others in this forum. By most recent count, there are 45 million uninsured people in the US. This is more than the total population living in the North East:Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont, combined. 45 million is 20 million more people than the total population of Iraq. Due to the increasing cost of health insurance, this number of uninsured is rising. Because of the lack of health insurance, many people are reluctant or precluded in getting appropriate medical care. For some, an illness resulting in costly medical procedures results in personal financial ruin. (Along with starting a business, you might also consider some estate planning to protect assets. In some ways, maintaining healthcare coverage has, out of necessity, sunk to gamesmanship.) It's a disgrace to the richest country in the world.
I apologize for waxing, and your situation may be different, but your apparent plight, and that of many others, is troubling.
Good Luck!
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