If you have workers spread across multiple states, you face unique challenges when it comes to providing your employees with health insurance. State-specific insurance requirements might make it difficult for you to cover all of your workers under a single plan. Fortunately, there are several ways to address this problem that may allow you to offer your employees the health coverage that they want.
The Challenges of Having Workers in Multiple States
- They don’t qualify for group health insurance due to state-specific insurance requirements. Insurance carriers must comply with federal rules, but they’re regulated at the state level, and some carriers won’t cover out-of-state employees. Others will permit coverage for out-of-state workers only when a majority of eligible employees are located in state.
- Their out-of-state workers don’t qualify for the company’s plan, but the company wants to find a way to cover them.
- Their employees pay for their own private coverage, but would like the company to pitch in.
- They find it too difficult to navigate the myriad multistate rules in the SHOP marketplace.
If these sound like familiar struggles, you have three options: one national plan, separate state plans, or a health reimbursement arrangement (HRA).
Option 1: Offering One National Plan
Offering one national plan eliminates the need to keep track of multiple states’ rules, notifications and underwriting guidelines. All employees receive the same group health insurance regardless of where they live, and no one is left in the cold when it comes to coverage.
However, choice is limited as few insurance carriers offer national plans. Additionally, this convenience could come with a hefty price tag, which could put it out of reach for many small businesses
Option 2: Offering Separate State Plans
Another option is to offer separate state plans to accommodate workers in multiple states. This allows employees to receive coverage that’s tailored to their needs and preferences.
On the downside, managing multiple policies can be a complicated and time-consuming prospect—especially for a small business. Additionally, businesses located in a state with its own health insurance exchange must create an account for each marketplace rather than using a single account through the federal exchange.
Option 3: Offering a QSEHRA
A third option for businesses with multistate employees is to offer a health reimbursement plan like the qualified small employer health reimbursement arrangement (QSEHRA). With the Small Business HRA, businesses set a fixed monthly allowance for all employees regardless of which state they call home. The employees then purchase an individual policy and request reimbursement for the premium (along with other qualified out-of-pocket expenses) from the business.
This allows employees to select the coverage that best suits them, it ensures that everyone receives the same amount of money to put toward their insurance policies and medical costs, and it eliminates many of the administrative headaches associated with group health insurance. As an added bonus, an HRA typically saves businesses money over a national policy or separate policies in multiple states.
Group health insurance doesn’t work for everyone, and other solutions for employees working in multiple states can be expensive and complicated. Whether you employ workers across the state line or across the country, an HRA might be a better fit for your employees’ needs as well as your company’s bottom line.
Has your company saved money by switching from group health insurance to an HRA? Let us know in the comments below.