Do I Have to Offer Health Insurance to Employees?
June 21, 2026 · 4 min read
Whether you''re required to offer health insurance comes down to size. Most small businesses are not legally required to — but there are good reasons many do anyway.
The rule by company size
Businesses with fewer than 50 full-time-equivalent employees generally have no federal requirement to offer health insurance. Applicable large employers (50+ FTEs) are subject to the ACA employer mandate and can face penalties for not offering affordable coverage.
Why offer it if you don''t have to
If you''re under 50 employees, offering benefits is a choice — usually made for hiring and retention, since health benefits are consistently one of the most valued perks employees ask for. A thoughtful benefit helps a small business compete with bigger employers.
Where an ICHRA fits
An ICHRA lets you offer a real, tax-free health benefit without the cost and rigidity of a group plan, with a budget you control. For employers under 50, it makes voluntarily offering benefits affordable. For larger employers who must offer coverage, an affordable ICHRA can satisfy the employer mandate.
The bottom line
You don''t need a traditional group plan to meet the goal — whether it''s required (50+ employees) or voluntary (under 50). A broker can confirm what applies to your headcount and set up an option that fits.
The 50-employee line, explained
The federal requirement hinges on being an Applicable Large Employer, generally an employer with 50 or more full-time-equivalent employees. FTEs combine full-time headcount with part-time hours, so a business with many part-timers can cross the line even without 50 full-time staff. Below that threshold, the ACA does not require you to offer coverage at all.
State and local mandates to watch
Federal rules are not the whole story. A few states and cities have their own employer coverage or contribution requirements, and some have individual mandates that affect your employees. If you operate in one of those areas, check the local rules alongside the federal ones.
Not required, but want to compete
Plenty of small employers offer benefits by choice because it helps them hire and keep good people. An ICHRA is a low-commitment way to start: you set a modest, fixed allowance, avoid group-plan minimums, and can grow the benefit as the business does.
Frequently asked questions
Most businesses under 50 full-time-equivalent employees are not required to. Employers with 50+ FTEs are subject to the ACA employer mandate.
Health benefits the modern way
Tell us about your team and get a free, no-obligation ICHRA quote — usually within 24 hours.