Do Employers Have To Offer Health Insurance? A Clear Guide for Workers and Business Owners

Health insurance is one of the most important employee benefits, but the rules around whether employers must offer health insurance can be confusing. The short answer: some employers are required to offer coverage, others are not—and it often depends on employer size and how many hours employees work.

This guide breaks down how employer health insurance requirements work, what “large employer” really means, and what your options are if coverage isn’t offered.

Do Employers Legally Have To Offer Health Insurance?

In many places, including the United States, employers are not universally required to provide health insurance to employees.

However, under laws commonly referred to as the employer mandate (for example, under the Affordable Care Act in the U.S.):

• Large employers are generally required to offer health insurance that meets certain standards or face potential penalties.
• Small employers are usually not required to offer health insurance at all.

The key factor is often whether the company is considered an Applicable Large Employer (ALE).

What Is an “Applicable Large Employer” (ALE)?

An Applicable Large Employer is typically an organization that has at least 50 full-time employees or full-time equivalents (FTEs) on average during the prior year.

How full-time status is usually defined

For employer coverage rules, a full-time employee is generally someone who:

• Works 30 hours or more per week, or
• At least 130 hours in a month

Part-time work can also count toward the total, using a conversion to full-time equivalents (FTEs). That means several part-time workers together might equal one full-time equivalent when calculating employer size.

When Must Employers Offer Health Insurance?

Large employers (about 50+ full-time employees/FTEs)

If an employer meets the ALE threshold, they are generally expected to:

1. Offer health insurance to at least 95% of full-time employees and their dependent children, and
2. Ensure that coverage is:
   • Affordable (the employee’s share of the premium for self-only coverage is below a set percentage of their household income, defined by regulations), and
   • Provides minimum value (it pays at least a substantial share of the total allowed costs for covered services and includes a reasonably broad range of essential benefits)

If a large employer does not offer coverage—or offers coverage that is not affordable or does not meet minimum value standards—and at least one full-time employee receives a premium tax credit for a plan through the health insurance marketplace, the employer may owe a penalty.

Small employers (generally fewer than 50 full-time employees/FTEs)

Smaller employers:

• Are usually not required by federal law to offer health insurance.
• Do not face employer-mandate penalties if they choose not to provide coverage.

Even though they may not be required to offer it, many small businesses voluntarily provide health insurance as a way to attract and retain employees.

Do All Employees Have To Be Offered Coverage?

Even when employers are required to offer coverage, not every worker must be included.

Here’s how it commonly breaks down:

*Rules can vary by jurisdiction and plan design; this table reflects general patterns where employer mandates exist.

Full-time employees

For large employers, full-time employees are the core group that must be offered coverage. If they are not offered qualifying coverage, the employer may be at risk for penalties.

Part-time, seasonal, and temporary workers

• Part-time employees (those working under the full-time hour threshold) typically do not have to be offered coverage, though some employers choose to offer it as an extra benefit.
• Seasonal or temporary employees may or may not be offered coverage. Employers often use measurement periods to determine if these workers count as full-time over time.

Dependents and spouses

• Many employer plans must allow enrollment of dependent children up to age 26.
• Coverage for spouses is not always legally required. Some employers include spouses, some restrict coverage for spouses who have access to their own employer plan, and others may not cover spouses at all.

What Kind of Health Insurance Must Employers Offer?

When coverage is required, it must meet certain standards. While the exact details can vary, employer plans are generally expected to be:

1. Affordable

Coverage is considered affordable if the employee’s share of the premium for self-only coverage does not exceed a specific percentage of their income (a fixed limit set by regulations and adjusted periodically).

2. Minimum Value

A plan usually provides minimum value if it:

• Covers a substantial portion of the total allowed costs for covered services, and
• Includes major categories of essential healthcare services, such as doctor visits, hospital care, and emergency services.

If a plan fails on affordability or minimum value, the employer might still face penalties, even if a plan is technically offered.

Are Employers Required To Pay for Most of the Premium?

There is no universal rule that employers must pay a particular percentage of the premium, but typical patterns include:

• Many employers pay a significant portion of the premium for employee-only coverage.
• Employee contributions are often higher when enrolling dependents or spouses.
• To be considered affordable under employer mandate rules, the employee’s share for self-only coverage must stay under the set income-based threshold.

Employers may choose to be more generous than the minimum rules require, but they are not always obligated to cover a certain percentage beyond meeting affordability standards.

What If Your Employer Doesn’t Offer Health Insurance?

If your employer is not required to offer health insurance—or chooses not to—you still have options.

1. Health insurance marketplace / exchange

Many people in this situation look for coverage through a health insurance marketplace or exchange, where:

• You can compare individual and family plans.
• You may be eligible for premium tax credits or cost-sharing reductions based on your income, especially if your employer does not offer affordable, minimum-value coverage.

2. Coverage through a spouse or family member

If your spouse or parent has employer-sponsored coverage, you may be able to join their plan, often during:

• Initial eligibility when they’re first hired or become eligible, or
• The plan’s annual open enrollment period, or
• A special enrollment period triggered by a qualifying life event (such as loss of other coverage, marriage, or birth of a child).

3. Other options

Depending on your circumstances and local rules, you might also consider:

• Public coverage programs (for those who qualify by income, age, or disability criteria)
• Student health plans (if you’re enrolled in school and they are available)
• Short-term or limited plans (where allowed) – but these often provide less robust protection and may not meet minimum coverage standards, so reviewing details carefully is important.

What If You Decline Employer Health Insurance?

Even if your employer offers health insurance, you usually can choose to decline (opt out). Before doing so, it’s important to understand the consequences.

Impact on marketplace financial help

If your employer offers coverage that is:

• Affordable, and
• Provides minimum value

you may not qualify for premium tax credits through the marketplace, even if you decline your employer’s plan.

On the other hand, if your employer plan is not affordable or does not meet minimum value, you may be able to seek marketplace coverage with potential financial help. Many people compare:

• The total out-of-pocket cost of the employer plan (premiums, deductibles, copays, etc.)
• Versus a marketplace plan with possible tax credits.

Timing matters

You generally can:

• Enroll or decline employer coverage when you are first eligible, and
• Make changes during the annual open enrollment period or after a qualifying life event.

Missing these windows can limit your choices until the next enrollment period, unless you qualify for a special exception.

What Are Employers’ Responsibilities Besides Offering Coverage?

When employers do offer health insurance, they typically have additional responsibilities, including:

• Providing clear information about the plan: what it covers, what it costs, and how to enroll.
• Not discriminating in how coverage is offered (for example, not offering health benefits to only certain similarly situated employees without a lawful reason).
• Maintaining required documentation and reporting, such as:
  • Informing employees about coverage options and eligibility.
  • Providing notices related to marketplace options where required.
  • Filing employer coverage information with tax authorities, when applicable.

Some employers also coordinate payroll deductions, help employees understand pre-tax versus after-tax contributions, and manage open enrollment each year.

Key Takeaways: Do Employers Have To Offer Health Insurance?

Here’s a quick summary to keep the essentials clear:

• Not all employers are required to offer health insurance.
• Large employers (typically those with about 50 or more full-time employees/FTEs) are generally required to:
  • Offer affordable, minimum-value health insurance to full-time employees and their dependent children, or
  • Potentially face penalties.
• Small employers (under the large-employer threshold) are usually not required by federal law to offer health insurance, though many choose to.
• Full-time employees are the main group protected by employer mandate rules. Part-time, seasonal, and temporary employees may or may not be offered coverage.
• If your employer does not offer health insurance, or the coverage is too expensive or limited, you may have options through:
  • A health insurance marketplace
  • A spouse’s or family member’s plan
  • Public coverage programs, if eligible

How To Navigate Your Next Steps 👍

If you’re trying to understand your situation, it can help to:

1. Find out your employer’s size

   • Roughly how many full-time employees and FTEs does your employer have?

2. Ask for the plan details in writing

   • Request the summary of benefits, premium amounts, and eligibility rules.

3. Check if the plan is considered affordable and minimum value

   • Look at your cost for self-only coverage and what services are covered.

4. Compare with other coverage options

   • Look at marketplace plans, a spouse’s plan, or other available options side by side.

5. Review during open enrollment each year

   • Your best choice can change as premiums, income, or life circumstances change.

Understanding whether employers have to offer health insurance—and what that means for you—comes down to employer size, full-time status, and how the plan is structured. Once you know where your situation fits, you can make more informed decisions about how to get and keep the health coverage that works for you.