Do employers have to offer health insurance?

Employers have the option to offer various benefits to employees, with health insurance being one of the most common. There’s no shortage of reasons to provide health insurance:

• Recruiting and retaining top talent 
• Reducing absenteeism
• Boosting employee morale and satisfaction 
• Helping the employer and employee save money

With reasons like these, you don’t have to look far to understand why most companies provide some level of medical insurance coverage.

Rules for offering health insurance to employees

As a business owner or HR professional, you understand the pros and cons of offering health insurance. Even so, you’re likely to have questions. One of the most common questions is: Are employers required to provide health insurance?

There’s no simple answer to this question, as it varies based on factors such as location, company size, and employee type. 

Before you do anything else, take some time to familiarize yourself with The Affordable Care Act (ACA). It contains language about which types of companies must provide access to health insurance or pay a fine for failing to do so. 

According to the ACA, companies with 50 or more full-time equivalent employees are required to offer health insurance. 

Failure to adhere to this requirement can result in a large fine. Here’s an excerpt from a resource shared by The Society for Human Resource Management:

A penalty of $2,750 (for 2022) per full-time employee minus the first 30 will be incurred if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents, and any full-time employee obtains coverage on the exchange.

In other words, the penalties for not offering coverage can quickly add up. 

When do employers have to offer health benefits?

How far into an employee’s tenure should you wait before offering health insurance? This depends on the process that you have in place. Generally speaking, you have two options:

• Provide access to health insurance benefits from day one.
• Provide access after a probationary period, such as 30, 60, or 90 days.

By waiting to provide benefits, you get the opportunity to determine if the person is a good fit as a long-term employee. This can save you both time and money if you and/or the employee decide to move on. 

Note: The maximum allowable waiting period is 90 calendar days. 

What about part-time employees and temporary workers?

There’s no requirement to provide health insurance to part-time or temporary workers, even if you provide coverage to your full-time workers.

Since temporary workers generally work for a company for a short period of time, health insurance typically isn’t made available. They usually move on to a new position before the maximum 90-day waiting period is over. This often means that they never gain eligibility for coverage. 

Note: Be sure to comply with all HIPAA nondiscrimination rules. 

Health insurance rules for employees in different countries

All the information above pertains to companies and employees in the United States. However, if you have a remote workforce—or plan on going down this path in the future—there are other rules to take into consideration. 

Tip: Our remote work regulation guides will help you understand what’s required of you based on where an employer resides. 

For example, public health insurance is available in countries such as Canada, Germany, and Sweden. 

Spain is another good example, as the law requires all employers to provide employees with medical insurance. We discussed this in a recent blog post, noting the following:

In Spain, all employees must enroll for the General Social Security Fund (Tesoreria General de la Seguridad Social - TGSS), the government agency regulating social security benefits. Typically, the social security premium is 28.3% of an employee's salary, with the employer required to pay 23.6% and the employee responsible for the remaining 4.7%.

If you employ a global workforce, familiarize yourself with the applicable health insurance regulations. 

What next?

The decision to offer or not offer health insurance isn’t always up to you. For instance, in the United States, you may be required by the ACA to offer coverage to your workers.

For distributed teams, Oyster Health Global enables you to offer high-quality health insurance coverage to every TeEam Member, regardless of location. 

Forget about making a mistake that costs your company time and/or money. Rely on Oyster to hire top talent, manage your workforce, and administer a comprehensive benefits package.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.