Health Insurance

What are minimum participation requirements for health insurance?

If you have small group health insurance, your insurer will likely have participation requirements; These require at least a certain percentage of your eligible employees to enroll in the plan.

The percentage varies by state and by insurer, but it’s often about 70 percent. That would mean that about 70 percent of eligible employees must enroll in the plan offered by your company. Who is considered “eligible,” you might ask? Luckily, employees who already have coverage from another source (like a spouse) aren’t usually counted in these percentages.

Let’s do an example:

Let’s say you have 30 employees who are eligible for your health plan. If your insurer has a 70 percent participation requirement, that means at least 21 of your employees would need to enroll in the plan. If 21 employees enroll, you’re in the clear. Seems simple enough, right?

In a different scenario, let’s say 10 of your 30 employees already have coverage under their spouse’s plan. In this case, only 20 of your employees would be counted as “eligible,” because those are the ones that don’t already have health coverage. So, in order to meet the participation requirements, 70 percent of your 20 employees would need to enroll in your health plan. If we do the math— 70 percent of 20 is 14. Voila, 14 of your employees would have to enroll in order for you to meet the participation requirements.

Do part-time employees count as “eligible”?

First off, yes, you can offer health insurance to part-time employees. (More on that here). And yes, if you offer insurance to part-time employees, part-time employees are counted in the participation requirements.

So, if you do offer health coverage to part-time employees, make sure there’s enough total eligible employees (both full- and part-time) to meet the minimum enrollment requirements.

What happens if you don’t meet the minimum enrollment requirements?

If your group won’t meet the minimum participation requirements, don’t fret! You can still enroll in coverage, but there’s a limited window to buy a plan.

Your business can purchase a plan from any small group insurer during a one-month open enrollment period each fall, between November 15 and December 15. During that window, insurers have to accept small groups, regardless of the percentage of employees who enroll in the plan.

This can all get pretty tricky. The best thing to do is to work with a broker who can help you choose and roll out a plan for your team, and keep you compliant.

This article provides general information and shouldn’t be construed as legal, benefits, or HR advice. Benefits and insurance regulations may change over time and may vary by location and employer size. So, please consult a licensed broker or appropriately certified expert for advice specific to your business’s benefits options.