Do I have to offer health insurance in New York? No, not unless you have 50 or more full-time equivalent employees. Below that threshold, offering group health insurance in New York is optional under federal and state law, though plenty of small employers offer it anyway to attract and keep good people.
Where the Legal Requirement Kicks In
The Affordable Care Act’s employer mandate applies to businesses with 50 or more full-time equivalent employees, calculated by combining full-time staff with the hours worked by part-time staff. Below that number, there’s no federal or New York state requirement to offer group health coverage at all.
This surprises plenty of small business owners, who assume there’s some smaller threshold, maybe 10 or 20 employees, where the requirement kicks in. There isn’t. A five-person business and a forty-person business are in exactly the same position under the law: offering coverage is a business decision, not a legal one.
What New York Does Require Regardless of Health Insurance
Even though group health insurance itself is optional below 50 employees, New York requires two other coverages that get confused with health insurance all the time. Disability Benefits Law, or DBL, provides partial wage replacement for employees who can’t work due to a non-work-related injury or illness, and it’s mandatory for nearly every employer with one or more employees.
Paid Family Leave, or PFL, is also mandatory statewide, covering paid time off for employees bonding with a new child, caring for a seriously ill family member, or assisting when a family member is deployed for military service. Both DBL and PFL are separate policies from group health insurance, and employers sometimes find out they’re missing one or both only after a claim comes in, which is not the moment you want to discover a gap.
Why Many Small Employers Offer Health Insurance Anyway
Offering group health coverage below the 50-employee threshold is a competitive decision, not a compliance one. In a tight labor market, especially for skilled trades and office staff across the Hudson Valley, group health coverage is often what actually decides between two job offers.
Group health plans in New York use community rating, meaning a small group’s premium isn’t based on the specific health of its employees. That can make coverage more accessible for a small group with older employees or existing health conditions than it would be if medical underwriting were allowed.
A Section 125 cafeteria plan can also make offering coverage more affordable, since it lets employees pay their share of premiums with pre-tax dollars, lowering payroll tax costs for the business at the same time.
Common Questions About the Employer Health Insurance Requirement
How is the 50 full-time equivalent threshold calculated? Full-time employees, generally those working 30 or more hours weekly, count as one each. Part-time hours are combined and divided to calculate additional full-time equivalents, so a group of part-time staff can push a business over the threshold even without 50 full-time employees on the books.
Is DBL the same thing as short-term disability insurance? DBL is New York’s mandatory version of short-term disability, but its wage replacement is modest. Many employers add a supplemental short-term disability policy on top of DBL for more meaningful income protection.
Do I have to offer health insurance if I only have five employees? No. There’s no minimum employee count in New York that triggers a health insurance offer requirement below the 50 full-time equivalent federal threshold.
Can I offer health insurance to some employees and not others? Not really. Group health plans generally require offering coverage to all eligible employees within a defined class, like all full-time staff, rather than picking and choosing individuals.
What happens if I’m close to 50 employees and growing? Worth reviewing your staffing plan with your agency before you cross that line. The mandate and its penalties apply based on your prior year’s average, not the exact day you happen to hit 50.
We’ve been doing business this way in the Hudson Valley for over 80 years. If you’re trying to figure out what your business is actually required to carry, call us. No phone tree, no pressure, just a straight answer.