top of page
  • Writer's pictureTroy Vermillion

Do Employers Have to Offer Health Insurance?

As an employer of a small business, it's important to know what your obligations are when it comes to offering health insurance for your employees. The rules for offering health insurance to employees vary from state to state, and there is no one definitive answer when it comes to the requirements of how much the employer must contribute or whether participation must be mandatory.

At a federal level though, many states have laws in place that require employers with a certain number of employees or more, to offer some type of health coverage at a minimum. It's essential that businesses understand their responsibilities with regard to providing employee health care so they can make sure they are compliant with all regulations.

What do employers have to offer exactly?

The Affordable Care Act (ACA) plays a major role in determining whether or not an employer is required to offer their employees health insurance or pay a hefty fine. For smaller businesses, generally those with fewer than 50 full-time or full-time equivalent (FTE) employees, the requirement to offer such insurance only applies if it has already been agreed upon in an employment contract.

Despite this being the case, many small business owners still choose to offer health benefits as it can be an attractive perk when seeking out new workers, while at the same time helping to maintain good relationships and retain their current team. Furthermore, ACA provisions provide very specific rules that must be adhered to if medical coverage is provided by the employer.

Providing health insurance coverage to all full-time employees is a must for small business owners. Generally, businesses define full-time employees as those who work at least 30 hours per week on average. Given the likelihood of fluctuating hours among part-time staff, employers have no responsibility to extend such coverage in this case.

However, if an employer decides to offer health insurance coverage to any part-time employee, they must provide group coverage to all part-time workers regardless of their individual working hours. This stipulation ensures that the entirety of the part-time workforce is given equal access to medical benefits.

What are the contribution rules for health insurance for small employers?

Premium Contribution is a form of cost-sharing, which requires the employer and employee to share in the expense of health insurance premiums. Most states have laws ensuring that employers must pay at least 50 percent of an employee's premium, though variations can occur based on location.

Additionally, the Affordable Care Act provides small businesses with tax credits to help defray these costs. Ultimately, Premium Contribution is an efficient way for employers to offer a wide range of healthcare solutions to employees without having to shoulder the entire cost.

What obligations do employers have to employee dependents?

Offering group health insurance to employees is a great way to help them stay healthy and well cared for. As part of this benefit, employers need to allow plan-eligible employees to cover their dependents. This could mean spouses, in some states domestic partners, and children whether natural, adopted or dependent up to the age of 26 living at home or away.

It should be noted though that while employers are required to extend coverage to dependent children through age 26, they have no obligation to pay for premiums for dependents.

Employers may choose as part of the benefits package to contribute towards premium costs but at the end of the day they must ensure that employees are given the option and choice of enrolling themselves and their dependents into the plan chosen.


Offering group health insurance is an important consideration for small business owners. Although those with fewer than 50 employees are not legally obligated to provide health coverage, many decide to do so as a way to attract and retain talent. Workers appreciate having access to group coverage since it is usually more affordable than individual plans.

Employers also benefit from offering health insurance; they may join the plan alongside their employees and qualify for certain tax deductions to lower their costs. By offering group health insurance, employers can create a more secure environment where employees can stay healthy while feeling supported.



bottom of page