In the United States, where healthcare costs are soaring, it’s no wonder that employees are seeking health insurance as a valuable benefit. Employers often use benefits packages, including healthcare, vision, and dental coverage, as a way to attract and retain talented individuals.
For smaller businesses, offering benefit plans is typically voluntary. There is generally no legal requirement for small employers to provide healthcare or wellness benefits to their employees. However, the situation is different for larger employers. Many of them choose to offer health insurance to avoid penalties imposed by the Affordable Care Act (ACA).
Employer-Sponsored Health Insurance and the ACA
While there is no law directly mandating employers to provide healthcare coverage, the ACA does impose penalties on larger employers who fail to do so. Under the ACA, employers with 50 or more full-time employees (or the equivalent number of part-time employees) must offer health insurance to 95% of their full-time employees. Failure to comply results in a hefty penalty of $3,860 per employee per year (2020 figures).
Hence, large employers have a strong incentive to provide health coverage. However, it’s important to note that employees do not have the right to demand medical care under the ACA.
To be compliant with the ACA, health insurance must meet minimum coverage and affordability requirements. Additionally, coverage must extend to an employee’s dependents, which includes biological or adopted children under the age of 26. However, stepchildren, adopted children, and spouses are not considered dependents under the ACA.
Health Insurance Coverage as a Voluntary Benefit
Interestingly, many smaller companies choose to offer health insurance as a voluntary benefit, even though it is not legally required. In fact, a study by the Urban Institute found that 83.1% of all workers were offered health insurance through their employers in the first quarter of 2016.
In other words, if you’re currently employed, chances are you receive health insurance through your company. However, it is perfectly within an employer’s rights to choose not to provide it, regardless of their size.
When Can an Employer Be Obligated to Provide Health Coverage?
As is often the case, there are exceptions to the general rule that employers do not have to provide medical care. Here are a few situations where you might have rights:
1. Your Employment Contract Requires It
While most employees in the United States work at will, meaning they can be terminated without cause, there are instances where an employment contract exists. If you have a written or oral employment contract that guarantees specific rights or benefits, such as health insurance, your employer must honor that promise. The same holds true for unionized employees with collective bargaining agreements that guarantee healthcare.
2. Employees in Similar Situations Are Offered Medical Care
Under the Health Insurance Portability and Accountability Act (HIPAA), employers offering group health insurance must provide it to similarly situated employees. Employers may differentiate between groups based on employment classification, such as full-time or part-time status, length of employment, geographic location, or position. However, within those groups, similarly situated employees should be treated equally when it comes to health insurance.
3. Your Employer Offers Health Insurance Discriminatorily
Employers are prohibited by federal law, such as Title VII of the Civil Rights Act, from discriminating in employment, including compensation and benefits, based on factors such as race, color, sex, national origin, age, disability, pregnancy, religion, or genetic information. Therefore, if your employer offers health insurance in a discriminatory manner, such as providing coverage only to men or employees under 40, it would be considered illegal.
Employer Health Insurance Continuation Laws
If your employer offers group health insurance, you have the right to continue the coverage even after leaving employment. The federal Consolidated Budget Reconciliation Act (COBRA) mandates employers with 20 or more employees to allow former employees to maintain health insurance coverage at their own expense.
Whether you resign, are laid off, or terminated for reasons other than gross misconduct, you have the option to keep your group health coverage by paying the full amount of the premium. If you want more information on health insurance continuation through COBRA, check out our detailed article on the topic.
So, while there is no general legal requirement for employers to provide health insurance, there are circumstances where they may be obligated to do so. It’s essential to be aware of your rights and understand the laws in your specific situation.