Do California Employers Have To Offer Health Insurance?

Saturday, September 30, 2023 06:44 Posted by Admin
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In California, employers with 50 or more full-time equivalent (FTE) employees are required to offer health insurance under the employer mandate that came into effect in 2016. However, smaller businesses and those employing part-time workers are not obligated by state law to provide health insurance coverage.

The Employer Mandate

The employer mandate is a federal requirement under the Affordable Care Act (ACA) that came into effect in 20161. This mandate requires businesses with 50 or more FTE employees to offer health insurance to at least 95% of their full-time employees and their dependents up to age 26, or they may face penalties1. The primary purpose of this mandate is to encourage employers to play a role in expanding healthcare coverage across the country.

California State Laws

Under California law AB1672, small employers are guaranteed group coverage should they choose to purchase it, regardless of the employees’ health status2. This law is particularly beneficial for small businesses as it ensures they can obtain health coverage for their employees irrespective of any pre-existing conditions the employees might have. This law applies to employers with between 1 and 100 employees.

Penalties for Non-Compliance

Employers who do not offer health insurance as mandated can face penalties. The penalty for not offering coverage is $2,000 per eligible employee3. It’s important to note that coverage is not required for part-time employees (those working less than 30 hours weekly)3.

Group Health Coverage

Most people in California get group health insurance through their job, also known as employer-based coverage4. Larger employers with 50 or more employees typically purchase health insurance plans and offer them to their employees as part of their compensation package.

Part-Time Workers and Health Insurance

In California, employers are not required by law to offer health insurance to part-time workers5. However, under the ACA, if an employer has 50 or more FTE employees, they must offer coverage to all full-time employees, defined as those working an average of 30 hours or more per week5.

Discontinuation of Medical Benefits

If an employer who provides employee medical benefits decides to discontinue those benefits, they must provide employees with written notice at least 15 days in advance of the discontinuation6. This requirement is designed to protect employees and give them ample time to seek alternative health coverage if needed.

Health Insurance for Small Businesses

Health insurance companies must offer identical plans to small businesses with 1 to 100 employees7. This means that even small businesses with just a few employees have access to the same health insurance plans as larger businesses.

California Residents and Health Insurance

While the mandate to provide health insurance does not apply to employers with fewer than 50 FTE employees, it does apply to California residents8. To comply, California residents must have qualifying health insurance coverage, unless they qualify for an exemption8.

Coverage for Domestic Partners

As of 2004, California health care service plans and health insurers are required to provide coverage to registered domestic partners of employees9. This includes same-sex and opposite-sex domestic partners, ensuring equal access to health insurance coverage for all employees.

In conclusion, while California employers with 50 or more FTE employees are required to offer health insurance, smaller businesses and those with part-time employees are not obligated by state law to do so. However, irrespective of size, many employers choose to offer health insurance benefits to attract and retain quality employees.


Written by Todd Taylor

Todd Taylor

Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.

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