With the high cost of medical care in the United States, it's no surprise that health insurance is one of the most highly sought-after benefits by employees. Many employers use benefit packages—including health, vision, and dental coverage—to attract and retain employees.
For small employers, benefit plans tend to be offered on a voluntary basis: there is generally no legal requirement that small employers provide health or welfare benefits to their employees. But for larger employers, it is a different story. Many larger employers offer health insurance to avoid penalties imposed by the Affordable Care Act (ACA).
Under the ACA, employers with 50 or more full-time employees (or the equivalent in part-time employees) must provide health insurance to 95% of their full-time employees or pay a penalty to the IRS. This penalty is quite hefty—$4,320 per employee per year (in 2023). As a result, large employers have a strong incentive to provide health coverage. However, employees have no right to demand health care under the ACA.
To comply with the ACA, the health insurance must meet minimum requirements for coverage and affordability. Coverage must also be extended to the employee's dependents, which are defined as biological or adopted children under the age of 26. However, spouses are not considered dependents under the ACA, nor are stepchildren or foster children.
Many smaller companies offer health insurance as a benefit, even if they aren't required to by law. In fact, the majority of Americans have health insurance coverage through an employer.
In other words, you are likely to receive health insurance through your company, but it's perfectly legal for employers of any size to refuse to provide it.
As is often the case, there are a few exceptions to the general rule that employers don't have to provide health care. For example, you might have rights in the following situations:
If your employer does offer group health insurance, you have the right to continue it after you leave employment. The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more employees to allow their employees to continue health care coverage at their own expense.
If you quit, are laid off, or are fired for reasons other than gross misconduct, you can continue to receive your group health coverage, as long as you pay the full amount of the premium. (To learn more, see our article on health insurance continuation through COBRA.)
Under the Affordable Care Act, employers with 50 or more full-time employees (or full-time equivalents) must provide health insurance coverage to 95% of their full-time employees. If they fail to meet this requirement, they'll owe a penalty to the IRS.
No federal law requires small companies to offer health insurance coverage.
If you're taking leave under the Family and Medical Leave Act (FMLA) or a similar state law, your employer generally must maintain your health coverage during your period of leave. However, you'll still have to pay your portion of the premiums.
Whether you continue to receive health coverage during voluntary leave depends on the policies established by your employer. Some employers maintain health insurance benefits during voluntary leave as part of their employee benefits package; others do not. Check your employee handbook or talk to your human resources department prior to taking leave to learn whether you'll be covered.