THE SMALL BUSINESS CONNECTION TO HEALTH COVERAGE
HIP Questions & Answers
How Does HIP Work?
Washington’s Health Insurance Partnership, or HIP, provides Washington small employers with access to the same health
insurance coverage available in the small group health insurance market, but at a significant savings. With HIP, the
employer contribution rate is only 40% of the cost of coverage compared to the standard 75% in the small group market.
To help employees pay for their share of the coverage, HIP also offers a premium subsidy (up to 90%) to eligible employees,
based on their family income.
Who Can Enroll in HIP?
Small employers (with 1-50 employees) can enroll in HIP if they do not currently offer health insurance coverage to their
employees, and if at least 50% of their employees are low-wage. To be considered low-wage, an employee’s monthly wages
cannot exceed 200% of the Federal Poverty Level (FPL).
How Do Small Employers Qualify for HIP?
Employers must meet the carrier’s eligibility requirements for health insurance coverage. Once enrolled, employers must
agree to purchase their health insurance coverage through the program and establish a Section 125 plan. This plan allows
employers to deduct payments for health insurance premiums from employees’ pay on a pre-tax basis, lowering both the
employees’ taxable income and the employer’s payroll tax obligation.
At least 75% of a business’s eligible employees must purchase the health insurance coverage and employers must
contribute at least 40% toward their employees’ premiums. Employers are not required to make a contribution toward
spouse or dependent coverage.
What Health Plans Are Available Through HIP?
A variety of health plans from many different health insurance carriers are available. Plans range from low-cost,
high-deductible plans to comprehensive coverage. Employers select from this group of health plans and all participating
employees enroll in the same plan.
Who is Eligible for a Subsidy from HIP?
Employees who are Washington State residents with a gross family income at or below 200% of the Federal Poverty Level
may be eligible to have a portion of their premium obligation subsidized. Income maximums are based on the number of
people in a family. For example, as of January 2010, the maximum monthly income for an individual is $1,805. For a family
of four, the maximum monthly income is $3,675. The amount of subsidy an employee receives is dependent on the gross
family income. There are finite funds available for subsidies, so they are awarded on a first-come, first-served basis to
qualified employees. Subsidies are only offered to qualified employees. The employer contribution is not subsidized.
How is HIP Funded?
HIP is funded by a federal grant from the U.S. Department of Health and Human Services State Health Access Program
(SHAP). The goal of the SHAP grant is to increase access to health insurance coverage for low-wage workers throughout
Is HIP the Same or Similar to Basic Health?
Although both programs are administered by the Washington State Health Care Authority, HIP is a separate, distinct
program designed exclusively for Washington’s small employers and their employees.
www.hip.hca.wa.gov 800.377.0976 20021 120th Ave. NE, Suite 200, Bothell, WA 98011
HCA 90-322 (5/11)