Do startups have to offer health insurance?

Startups aren’t always required to offer health insurance. However, applicable large employers (ALEs) with 50 or more full-time equivalent employees (FTEs) must comply with the Affordable Care Act (ACA) employer mandate. Even when health coverage isn't required, offering a health benefit can help startups attract and retain employees.

What is the best health insurance for startups?

The best health insurance option for a startup depends on factors like company size, budget, and employee needs. Traditional group health insurance is one option, but many startups choose health reimbursement arrangements (HRAs), such as an individual coverage HRA (ICHRA) or qualified small employer HRA (QSEHRA), because they offer greater flexibility and predictable costs.

Is an ICHRA or QSEHRA better for startups?

The right choice depends on your startup's size, growth plans, and benefits goals. An ICHRA is available to employers of all sizes and offers more flexibility, including no annual contribution limits and customizable employee eligibility options. A QSEHRA is only for small businesses with fewer than 50 full-time equivalent employees (FTEs) and has annual contribution limits set by the IRS.

Can you use an HRA to pay for an HMO plan?

Yes. If your employer offers a stand-alone health reimbursement arrangement (HRA), such as an individual coverage HRA (ICHRA) or qualified small employer HRA (QSEHRA), you can receive tax-free reimbursements for eligible individual health insurance premiums, including HMO plan premiums. You’ll need to provide proof of coverage and other required documentation to receive reimbursement.

Is an HMO plan better than a PPO plan?

It depends on your healthcare needs and priorities. HMO plans typically have lower premiums and out-of-pocket costs but require you to use a specific network of providers and get referrals for specialist care. PPO plans usually cost more but offer greater flexibility when choosing doctors and accessing out-of-network care.

Are HMO plans available on the health insurance marketplace?

Yes. Many insurance companies offer HMO plans through the individual health insurance market, including plans available through the Health Insurance Marketplace. Availability, costs, and provider networks vary by location, so it’s important to compare your options based on your healthcare needs and budget.

When is Open Enrollment for 2027 health insurance coverage?

For most states that use HealthCare.gov, OE is expected to begin on November 1, 2026, and end on January 15, 2027. Some state-based Marketplaces have different enrollment periods, so check your state's official Marketplace for its current deadlines. It's also important to note that OE rules remain subject to ongoing litigation. A proposed federal rule that would have shortened the enrollment period was vacated by a federal court in June 2026 and is currently being appealed. As a result, enrollment deadlines could still change.

Which states have extended Open Enrollment periods?

Several state-based Marketplaces extend OE beyond the standard federal timeline, giving residents additional time to enroll in or change their health coverage. Those states include: California D.C. Massachusetts New Jersey New York Because enrollment dates can change from year to year, always verify your state's OE schedule through its official Marketplace website before enrolling.

What happens if I miss Open Enrollment?

If you miss OE, you may still be able to enroll in health coverage if you qualify for a special enrollment period (SEP). Common qualifying life events include: Losing employer-sponsored health coverage Getting married Having or adopting a child Moving to a new state or ZIP code Becoming eligible for an individual coverage HRA (ICHRA) or a qualified small employer HRA (QSEHRA) If you don't qualify for an SEP, you'll generally need to wait until the next Open Enrollment Period to enroll in Marketplace coverage.

Are health benefit plan notices required every year?

Some notices must be provided annually, while others are only required when employees become eligible, after qualifying events, or upon request. Employers should review their compliance obligations each year to ensure they meet all applicable deadlines.

What's the difference between an ICHRA notice and a QSEHRA notice?

Both ICHRAs and QSEHRAs require a written employee notice before the plan year begins. However, each notice includes different information based on the rules governing that type of HRA.

What happens if an employer doesn't provide required health benefit notices?

Missing required notices can lead to compliance issues, employee confusion, and potential penalties. For example, a group health plan or insurer that willfully fails to provide a required SPC may face a penalty of up to $1,000 for each failure6.

Can a small business offer a self-insured health plan?

Yes, but self-insured plans require employers to take on the financial risk of paying employee healthcare claims. Many small businesses choose alternatives, like the ICHRA or QSEHRA, to offer benefits with more predictable costs.

What's the difference between a self-insured health plan and an HRA?

With a self-insured plan, employers pay employee healthcare claims directly. With an HRA, employers set a fixed monthly allowance for eligible expenses, creating predictable costs without taking on claims risk.

How do I choose between a fully-insured health plan, a self-insured health plan, and an HRA?

It depends on your company's size, budget, and risk tolerance. Fully-insured plans offer simplicity, self-insured plans offer flexibility, and HRAs offer predictable employer costs while allowing employees to choose their own individual health insurance coverage.

Can you use a Section 125 premium-only plan (POP) with individual health insurance?

Generally, no. POPs are designed for employer-sponsored group health insurance premiums. However, employers can offer a POP alongside an ICHRA for employees who enroll in off-exchange individual health insurance plans.

What's the difference between a Section 125 plan and an HRA?

A Section 125 plan lets employees pay for qualified benefits with pre-tax salary reductions. An HRA is funded by the employer and provides tax-free employer contributions for eligible medical expenses and, in some cases, health insurance premiums.

Who should consider a Section 125 premium-only plan?

A POP is a good fit for employers that already offer group insurance and want employees to pay their share of premiums with pre-tax dollars. It’s also a great option for employers offering an ICHRA as long as employees enroll in off-exchange plans.

Why is employee engagement important for health benefits?

Employee engagement helps ensure workers understand, use, and appreciate the health benefits available to them. When employees participate in their benefits program, employers often see higher job satisfaction, better retention, and a stronger return on their benefits investment.

How can employers increase participation in health benefits?

Employers can increase participation by communicating regularly, educating employees about their options, offering personalized benefits, creating wellness initiatives, providing incentives, and gathering employee feedback. These strategies help employees better understand and use their benefits.

How do HRAs improve employee engagement?

Health reimbursement arrangements (HRAs) give employees more choice and flexibility by allowing them to select the individual health insurance coverage that best fits their needs. This personalized approach can increase benefit utilization and employee satisfaction while helping employers control healthcare costs.

Why are so many health insurance claims denied?

Health insurance carriers deny claims to defend profit margins and manage rising costs. Insurers deny claims based on their policies, such as provider networks, medical necessity, and pre-authorization. You should consult with your plan documents to determine what your specific plan covers.

What is the success rate of insurance appeals?

The success of health insurance claim appeals varies significantly. For Medicare Advantage plans, KFF reports that when beneficiaries appeal claims, 80% of those denials are overturned. Additionally, researchers at Brown University, the University of Texas at San Antonio, and the University of Chicago found that 78% of home healthcare denials in New York were overturned when appealed.

What happens if I lose an insurance appeal?

If you lose an appeal, you can ask for an independent review organization to review it. However, once an IRO reviews the appeal, their decision is final.

Holly Bengfort

Holly Bengfort is a content marketing specialist at Remodel Health and PeopleKeep, with three years of experience in HRAs and health benefits. Having experienced the QSEHRA firsthand as an employee, Holly provides invaluable insights into how it can benefit small businesses and their workforce. Before joining the team in 2023, Holly worked in television news as a broadcast journalist. With her experience as a news anchor and reporter, Holly has an exceptional ability to break down intricate stories into clear, compelling narratives that resonate with diverse audiences. Her talent for simplifying tricky topics ensures that everyone can fully grasp important information. Outside of work, Holly enjoys spending time outdoors, staying active, and relaxing on the beach.