Health insurance for employees in multiple states

Written by: Elizabeth Walker
Published on November 18, 2022.

Recently, more people have changed how and where they work to allow for greater flexibility and work-life balance. With this change, traditional offices are losing popularity as more organizations switch to remote work, which allows employers to hire from all over the U.S.

Having a multi-state workforce is great for recruiting efforts and growing your business. However, it can make offering health coverage to employees challenging.Not all insurance companies have the same type of network in every state, and even among those that do, healthcare providers may not offer the most cost-efficient networks for out-of-state employees.

This blog will show you four ways to offer health insurance coverage to your employees in multiple states so you can better support your remote workers.

Find out what other fringe benefits you can offer your multi-state employees in our guide

1. National health insurance plans

Your first option is offering a single national group health plan. A national group health insurance plan is a health plan available to employees all over the U.S. Offering a national plan keeps you from having to manage the different regulations each state has regarding health insurance.

National plans also eliminate the need to keep track of multiple states’ rules, notifications, and underwriting guidelines. All employees receive the same group health insurance with a national plan regardless of where they live, and no one misses out on quality coverage.

The only downside is that few health insurance companies offer national group plans, making a limited selection of plans available with typically higher prices.

2. State health insurance plans

Another option for employers seeking health insurance for their multi-state workforce is to offer separate state plans to your workers in various locations. This allows employees to receive essential coverage tailored to their needs and preferences.

An important thing to remember is that your insurance options may vary depending on which health insurance companies offer coverage in each state, so you should check which medical providers are available within a particular carrier’s network.

A good consideration for small businesses is the Small Business Health Options Program (SHOP) Marketplace, which helps small business owners provide health insurance coverage to their employees.

If you’re enrolled in a SHOP plan in the state where your primary business site is located, you can offer your multi-state employees' SHOP coverage in two ways:

  1. Choose a single health plan for all employees.
    1. Be sure to choose a plan with a multi-state or national provider network.
  2. Offer different SHOP plans in each state where your employees work.
    1. As long as your business meets all requirements to participate in the state's SHOP, you can offer coverage even if you have just one employee in a location.

While SHOP plans are widely available in most states, they aren’t an insurance option in states with their own healthcare exchanges. Another downside is that managing multiple policies can be complicated and time-consuming.

3. Health reimbursement arrangements (HRAs)

Another option that has risen in popularity lately is the health reimbursement arrangement (HRA). With an HRA, businesses set a fixed monthly allowance for all eligible employees to get reimbursed for their individual health insurance premiums, medical expenses, and other qualified out-of-pocket costs, regardless of where they live.

For employers, HRAs are a great way to eliminate many of the administrative headaches associated with group health insurance while still offering a comprehensive health benefit.

For employees, HRAs enable them to select the health plan of their choosing to ensure they have access to the best local healthcare providers for their needs.

As a bonus, HRAs are free of payroll taxes for both employers and employees and free of income taxes for employees, as long as their policy meets minimum essential coverage (MEC).

4. Health stipends

The last way to provide employee health benefits to your workers in different states is with a taxable stipend.

A stipend is a fixed amount of money paid to an employee in addition to their basic salary designed to cover whatever extra costs the employer allows, such as health insurance, wellness programs, and remote work expenses. Stipends can be paid out all at once as an annual lump sum or on a regular recurring basis, like monthly or quarterly.

Stipends aren’t subject to compliance issues that other employee health benefits have, and they’re simple to administer. But businesses must pay payroll tax on the reimbursements, and employees must claim the stipend as part of their household income.

However, while stipends come with more taxes, they are a good option if you have a lot of employees who qualify for premium tax credits.

Employees can participate in their stipend and collect their full premium tax credit, unlike with an HRA, where they typically have to reduce their premium tax credit by their allowance amount or opt-out of the HRA.

What you should consider before choosing a multi-state health benefit

The health benefit you select for your multi-state employees largely depends on cost, coverage preferences, flexibility, and plan availability. However, there are a few essential tips you need to keep in mind when looking for health insurance that will work in multiple states.

A few key tips you should keep in mind are:

  • Your employees’ location: Always look at the geography of the health insurance plan before purchasing. Just because a plan works in multiple states doesn’t mean it will work in the states you need or adequately cover all your employees’ healthcare needs.
  • The premium: If you need a multi-state health insurance plan, you may have to pay a higher premium. To budget effectively, it’s important to know your premium costs ahead of time and how much your employees will be responsible for paying on their end.
    • If you offer a cost-effective HRA or stipend, you’ll have more control over your health budget by being able to set an allowance amount that works for you.
  • How the coverage varies: If you have a health insurance plan that works in multiple states, you need to assess how the coverage changes from place to place. The Affordable Care Act (ACA) states that minimum coverage should provide affordable care for the ten essential health benefits.
    • With an HRA or stipend, employees can use their allowance to purchase the individual health insurance plan in their area that best meets their needs.


Nowadays, there are several effective options to choose from when offering health insurance benefits to your employees in different states. While the health insurance option you choose will depend on your budget and coverage preferences, your employee benefit should be flexible for your workforce, making an HRA or a health stipend an attractive option.

Whether you employ workers across state lines or across the country, PeopleKeep can help! From HRAs to health stipends through our WorkPerks software, we can set you up with a multi-state health benefit. Contact us today, and we’ll get your benefit package up to speed.

This article was originally published on January 20, 2020. It was last updated on November 18, 2022.

Originally published on November 18, 2022. Last updated November 18, 2022.


Additional Resources

View All Resources