Health insurance for employees in multiple states

Written by: Elizabeth Walker
Originally published on January 28, 2022. Last updated March 30, 2022.

Over the past few years, more people have changed the way they work. Traditional offices have disappeared as more organizations switch to remote work, which allows them to hire from all over the U.S.

Having a multi-state workforce is great for recruiting giving employers access to:

  • Greater business and client growth opportunities
  • A larger pool of employees to fill empty positions
  • More employee flexibility opportunities, such as remote workers

However, it can make offering health insurance a challenge. Some national insurance carriers don’t 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. So what other options are there?

In this article, we’ll discuss several ways employees can offer health insurance to employees in different states, such as:

National health insurance plans

A national group health insurance plan is a health plan that’s available to employees all over the U.S. Offering a national plan keeps you from having to manage the different regulations that 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 is left out when it comes to quality coverage.

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

State health insurance plans

Another option for employers looking to offer health insurance for their multi-state workforce is to offer separate state plans to your workers in various locations. This allows employees to receive coverage that’s tailored to their needs and preferences. An important thing to keep in mind is that your health insurance options may vary depending on which companies offer coverage in each state.

A good consideration for small businesses is the Small Business Health Option Program (SHOP) Marketplace, which helps small business owners provide health insurance 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 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 are not available as an insurance option in states that have their own healthcare exchanges. Another downside is that managing multiple policies can be complicated and time-consuming.

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 employees to spend on their own individual health insurance plan and other qualified medical expenses regardless of which state they reside in.

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

Which HRA is better for your organization—the QSEHRA or the ICHRA? Get our chart to find out!

Taxable stipends

The last way to bridge the gap in providing health insurance for employees in different states is to offer 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, internet, cell phone plans, home office equipment, and more. This stipend can be set up to be paid once as a lump sum or on a regular basis, like monthly or quarterly.

Stipends aren’t subject to compliance issues that other health benefits have and they are simple to administer. But businesses are required to pay payroll tax on the reimbursements and employees must claim the stipend as 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. Individuals with premium tax credits can receive a discount on their individual health insurance plan. With a stipend, employees can participate in both their stipend and collect their full tax credit, unlike with an HRA where they typically have to reduce their tax credit by their allowance amount or opt out of the HRA.


Having employees scattered across the U.S. is becoming the norm for many businesses. In today’s world, there are several effective options to choose from when offering health insurance to your employees in different states. While the health insurance option you choose will depend largely on your budget and coverage preferences, your employee benefit should also consider the flexibility it offers your employees, making an HRA or a health stipend an attractive option.

Whether you employ workers across the state line or across the country, PeopleKeep can help with one of our personalized benefits! From HRAs to health stipends through our WorkPerks benefit administration software, you can easily set up a multi-state health benefit with us. Contact one of our benefits advisors today and we’ll get your remote workforce up to speed.

This article was originally published on January 20, 2020. It was last updated January 28, 2022.

Originally published on January 28, 2022. Last updated March 30, 2022.


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