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Does My Employer Have to Offer Health Insurance in California?

Posted on September 7, 2023 in Employment Law

The healthcare landscape is continually changing in California, and insurance is a significant asset of employment packages. But are all employers required to offer health insurance? This question and its answer can help you determine if your career benefits your medical needs by providing health insurance.

Differentiating between state and federal mandates will help employees understand what health insurance requirements must be met.

State Mandates

California does not have a state mandate for employers to offer health insurance for employees. However, the federal government has specific requirements for some businesses.

Federal Mandates

Employers who employ 50 or more full-time equivalent employees (FTEs) are required by federal law to offer health insurance to full-time employees and their dependents, not including spouses. This employee count can be reached by a combination of factors. Under health insurance laws, two employees working 15 hours each week constitute one full-time employee, and not complying with federal mandates requires employers to pay the IRS a significant fee per employee.

By law, employers are required to provide minimum essential coverage (MEC). Failing to offer minimum coverage to at least 95% of full-time employees and their dependents requires an employer to pay an Employer Shared Responsibility Provision. There are two employer-shared responsibility payments an employer may be required to pay.

These payments are determined through annual reporting requirements.

Small Business Requirements

Small businesses in California with less than 50 employees are not required to provide the minimum essential coverage the federal government specifies. However, specific laws may qualify smaller businesses as those that must provide coverage. When unsure of your employer’s insurance responsibilities, speak with a San Diego employment lawyer.

Why Many Small Businesses Offer Health Insurance

Even without being required to offer health insurance, many small businesses are opting to meet the Affordable Care Act (ACA) requirements and offer insurance coverage. There are several reasons for this choice.

  • Tax deductions: Businesses can write paid employee premiums off as a business expense on state and federal income taxes.
  • Employee satisfaction and retention: California requires individuals to carry health insurance. Employees often seek jobs because of this benefit and tend to stay longer.
  • Reduced payroll taxes: Some plans allow employees to pay for their premium portions through pre-taxed money.

Additionally, small businesses opting to provide health insurance must supply coverage that meets marketplace requirements, ensuring these ten health benefits. These include:

  1. Hospitalization
  2. Emergency care services
  3. Ambulatory services
  4. Pre and Post Maternity and newborn care, including birth control and breastfeeding coverage
  5. Mental health treatment
  6. Preventive visits and disease management
  7. Prescription drugs
  8. Lab services
  9. Rehabilitative services
  10. Pediatric services

Dental and vision coverage are not considered essential services for adults.

Employee Litigation Attorneys in San Diego

Federal laws maintain specific health insurance requirements for employers in California, while the state defines individual requirements for health insurance. Regardless, health insurance is vital to every Californian’s well-being. If you feel an employer is not following governmental guidelines, let Walker Law work with you to provide exceptional employment litigation in San Diego.

Walker Law believes that every employee has certain rights in the workplace, and we diligently provide aggressive services for our clients. Schedule a free consultation to discuss your employer insurance coverage concerns.

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