Buying health insurance for your employees comes with plenty of benefits including healthier workers, better employee retention, and tax benefits from pre-tax salary deductions and credits.

Health insurance is also one of the most sought-after benefits by workers, considering the incredibly high cost of health care in the United States.

However, buying group health insurance for your business comes with a different set of rules than buying individual coverage.

Also, while the Affordable Care Act requires businesses with 50 and above employees to offer health insurance, group health insurance isn’t mandatory in New York.

In this article, we look at what group health insurance is and whether it’s mandatory to offer it to your employees in New York.

What is Group Health Insurance?

Group health insurance is typically a single policy offered to a group of people, including eligible employees and their dependents. Unlike individual medical coverage, group insurance coverage carries different rules, mainly due to the different way the insurer’s risk is calculated. 

While individual coverage is offered based on your medical history, group health coverage is issued regardless of your employees’ health status. Typically, insurers use general information of your employees like their gender and age to determine a premium price for your group coverage.

While group health insurance is often associated with large corporations, your small business might still be eligible for group coverage under federal law, regardless of the size of your business. That means you can buy a group health insurance plan even if you have 2 to 50 employees in your business.

Can you Purchase Group Health Insurance if You’re Self-employed?

While the IRS doesn’t consider self-employed individuals eligible for group coverage, some states, including New York, consider those who are either sole proprietors or a single-member LLC a group of one. That means you can purchase group health insurance even if you’re self-employed, so long as your business is situated in New York.

According to the IRS, you’re considered a small group of one if you’re working for yourself and have no employees. In New York, you can purchase group health coverage when you own a business but have no employees through either an insurance company or agent. This mandates your insurer to guarantee you coverage in the small group market regardless of your health status.

Is Group Health Insurance Required in New York?

As an employer, you’re required to provide health insurance for all your full-time employees under the Affordable Care Act, commonly referred to as the employer mandate. Failure to offer the coverage may lead to steep penalties from the IRS insurance.

However, if you’re a small-business owner with less than 50 full-time employees, it’s not mandatory to offer group health insurance in New York. Even so, it’s important to offer health benefits to ensure the health of your employees. But, many business owners struggle to meet the set group health insurance requirements in New York, making it impossible to purchase the coverage.

Participation Requirements for Group Health Insurance in New York

To purchase a group health insurance plan in New York, insurers require you meet minimum participation requirements to ensure they’re not losing money. Participation is determined by the percentage or number of full-time employees in a group health insurance plan or with coverage from another source.

The New York’s Department of Financial Services requires at least 50 percent of your eligible employees to participate in the group coverage. Employees with health insurance through another source like a government program or a spouse’s group policy can be included in the 50 percent participation requirement.

Is Your Business Eligible for Group Health Insurance In New York?

Apart from the participation requirements, there are other requirements you must meet to be eligible for group health insurance in New York. According to the New York’s Department of Financial Services, these requirements include:

  • Your business should be registered in New York State.
  • Your business must have had 1 to 50 full-time or full-time equivalent employees over the past calendar year.
  • The average annual wage must be $43,000 or less for at least 30 percent of your employees. But, the wage level is usually adjusted annually. Eligible employees should be working at least 20 hours per week. 
  • Your business shouldn’t have offered your employees a group health insurance policy in the last 12 months.

If you are a sole proprietor in New York, you’re required to have eligible full-time or full-time equivalent employees to qualify for group health insurance plans. Instead, you would qualify for individual health insurance plans. Once you purchase a group insurance plan, you should contribute at least 50 percent toward paying for the monthly employee premiums.

Eligible Employees for Group Coverage

To be eligible for group health insurance in New York, your business should have at least two employees, including you as the owner. This means that if you’re a sole proprietorship with one full-time employee or a partnership company, your business qualifies for group health insurance coverage.

Also, if you decide to provide a group health policy to any full-time employees, you must also offer coverage to all the other full-time employees. You also have the option to provide group health insurance to your part-time employees, usually those who work less than 20 hours per week. Like with full-time employees, you must offer coverage to all your part-time employees if you decide to purchase group health insurance for them.

Group health insurance should be available to all your employees regardless of their medical condition. That means any eligible worker can’t be denied coverage based on preexisting conditions. Dependents of your eligible employees also qualify for coverage under a group health insurance plan. Eligible dependents include spouses, children, and sometimes dependent parents.  However, dependents cannot enroll for group health coverage if your employee isn’t enrolled. 

Contact our New York Group Health Insurance Broker Today 

While health insurance is important to employees, that doesn’t make group health insurance mandatory in New York. However, purchasing group health insurance comes with a host of benefits including ensuring the health of your workers, improved employee retention, and numerous tax benefits.

If you decide to purchase group health insurance, you should choose one that best fits the needs of your business, your employees, and your budget. Also, if you’re struggling or don’t meet the minimum requirements for group health insurance, health reimbursement arrangements (HRAs) can be a superb alternative for you.