Employer Health Insurance Requirements

Small Business

Employer Health Insurance Requirements

Published on May 16, 2019


As a small business employer, you may be wondering what your health insurance requirements are. What are the criteria your small business needs to fulfill in order to offer health insurance, and what are your obligations toward your employees?
Continue reading to learn about employer health insurance requirements.

Are employers required to offer health insurance?

The provisions of the Affordable Care Act (ACA) determine whether an employer is required to offer health insurance or not. In most states, small businesses with under 50 full-time or full-time equivalent (FTE) employees have no legal requirement to offer health insurance. However, if a small business does decide to offer medical coverage, then it must meet the following health insurance requirements.

  • The health insurance coverage must be offered to all full-time employees. Typically, full-time employees are defined as those who work 30 or more hours per week.
  • A small business has no obligation to offer health insurance to part-time employees (usually defined as employees who work less than 30 hours per week).
  • However, if an employer offers insurance to at least one part-time employee, then the small business must offer group coverage to all part-time employees.

Conversely, an employer with 50 or more full-time or full-time equivalent employees is considered to be an applicable large employer (ALE), and is legally required to offer health insurance to all of its workers, as per the ACA’s health insurance requirements related to employer shared responsibility provisions.

What are contribution and cost-sharing requirements for employers?

Since group health insurance plans are a form of employer-sponsored coverage, this means that a business is required to share the cost of health insurance with employees. Typically, this cost-sharing element of health insurance requirements refers to a small business splitting monthly premium costs with workers.
In most states, employers are required to contribute or pay for at least 50 percent of each employee’s health insurance premiums, although this depends on the state the business is located in.

Are employers required to offer health insurance to employee dependents?

Health insurance plans generally allow qualified dependents to be added to any plan. However, for group health insurance plans, it is optional for employers to pay for the health insurance coverage of employee dependents. In most cases, employees can still add qualified dependents to their health plan, regardless of whether their employer decides to contribute to dependents’ premiums.

What documents are required for an employer to offer health insurance?

In order to meet health insurance requirements, a small business must provide copies of all relevant legal, tax, and accounting information when applying for group coverage. Employers are required to submit certain forms of documentation, including:

  • Proof of business location
  • Proof of business type
  • Payroll documentation

This standard information is used to verify and authenticate the legitimacy of a small business, and much of it is available through a previous year’s business tax filings. Ensuring that your company provides the right documentation can help streamline the process of meeting the health insurance requirements needed to offer group coverage to your employees.

Employer health insurance requirements summarized

Although small businesses with fewer than 50 employees are not required to offer health insurance, most workers highly value group health coverage and tend to sign up if group plans are available. There are also benefits for employers as well: business owners and their families may be able to enroll in their company’s health plan along with their employees, and they may benefit from business tax deductions.
eHealth’s licensed agents can answer your questions about employer health insurance requirements, and can help you find the right group health plan for your business. You can also quickly find and compare free quotes for small business health insurance by visiting eHealth.com.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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