There are many advantages to employing workers across state lines. Businesses can choose from a larger talent pool, and surveys show that remote employees are happier and more productive on average than in-office employees.
However, there are also challenges to having workers in multiple states. From income tax withholding to different health insurance requirements, managing a multi-state workforce can feel more like navigating a regulatory minefield. Fortunately, there are ways to make health insurance compliance easy and hassle-free.
Common Compliance Issues with a Multi-state Workforce
There are several compliance concerns to keep in mind when hiring employees across state lines.
Health insurance carriers are regulated at the state level, so when offering health benefits, laws vary between states. For example, California requires businesses to carry short-term disability insurance, but Oregon does not. This means a company could have workers from these states enrolled with the same group health insurance carrier but receiving different coverage.
Similarly, policy designs also vary by state, and some treatments or practices are mandatory in some states but not others—a factor that can influence group health insurance cost.
Perhaps most challenging are the various state forms, filings, and notification requirements businesses must monitor and track. Underwriting guidelines, as well as varying requirements for state SHOP marketplaces, also make it a chore for employers to administer policies in multiple states. Additionally, employers who purchase insurance through SHOP must usually enroll at least 70 percent of their workers—although a handful of states have higher minimum participation rates.
Group Health Insurance Is a Limited Option
One solution to these challenges is to purchase a group health insurance policy from a company that is set up to administer policies in multiple states. Major carriers like Aetna, Humana, UnitedHealthcare, and others provide policies that are accessible from different states, which makes compliance easier. On the other hand, national policies tend to be less flexible and often limit the number of providers available to employees.
Qualified Small Employer HRA: Compliance Made Simple
The complexities of multiple state health insurance and the limited choices of national carriers have caused many employers to turn to a third option—health reimbursement arrangements (HRAs).
Compared to state-specific and national group health insurance policies, the qualified small employer HRA (QSEHRA) is a straightforward solution for businesses that want to provide health benefits without the hassles of complex administration. Companies set an allowance amount for employees, employees purchase an individual health insurance policy for themselves, and request reimbursement as they incur medical expenses.
With the QSEHRA, compliance requirements are simple:
- A ninety-day QSEHRA notice requirement
- An annual allowance amount maximum
- Allowance amount variation by family status
Read more about the QSEHRA here, or download our free ebook: The Comprehensive Guide to the Small Business HRA.
Besides scaling back compliance concerns, the QSEHRA is generally more cost-effective for small businesses and a more flexible option for employees living across state borders.
This article is part of a series on how small businesses that employ individuals in multiple states can choose and administer health insurance. Previous articles discuss options for businesses with a multistate workforce and questions businesses should ask when choosing a plan. Click here and here to read more.