​Health Insurance Considerations for Your Remote Workers

The number of businesses and organizations with remote workers has skyrocketed in the past decade.

This newer way of working has produced plenty of benefits and challenges. For instance, we talked previously about some of the tax considerations for employees and employers when it comes to working remotely.

Another consideration for employers is whether their health insurance plans will cover team members working in different states.

Below, we’ll take a look at some different options for employers and some of the pros and cons.

State plans

State health plans can help employees tailor their coverage to their needs. However, that coverage can also vary quite a bit depending on what health insurance companies offer coverage in any given state. And it can get complicated and time-consuming to manage several policies.

Small businesses with fewer than 50 employees might be able to take advantage of the Small Business Health Option Program for health insurance. SHOP exists in most states. However, it’s not an option in states with their own healthcare exchanges.

Stipends

Another option for offering health insurance to team members in different states is a taxable stipend.

With a stipend, employees get a fixed amount of money — that’s in addition to their salary — to cover things like health insurance or wellness programs. You can pay out a stipend on a regular basis, like monthly or quarterly, or as a lump sum.

Stipends aren’t subject to the same compliance issues as other healthcare plans and are usually pretty simple to administer.

But there are tax considerations. Businesses have to pay payroll tax on stipends, and employees have to claim them as income.

Health reimbursement arrangements

HRAs are becoming more popular, and there are a lot of benefits. With an HRA, your business or organization sets a fixed monthly allowance for all staff members. Your employees then get to spend that allowance on their individual health insurance plan and other qualified medical expenses, no matter what state they live in.

HRAs eliminate a lot of the administrative work that goes with group plans. Also, as long as your policy meets what’s called “minimum essential coverage,” you don’t have to pay payroll taxes, and employees don’t have to pay income tax.

The drawbacks include a tricky initial plan setup that can be costly if you have a third party do it, the IRS’s strict rules about claims, and potentially a lot more paperwork to fill out.

National health insurance plans

With a national healthcare plan, employers don’t have to manage all the different state rules. Every employee gets the same coverage, no matter what state they’re in.

But the costs can get high. And because only a handful of companies — including Aetna, Blue Cross Blue Shield, Cigna, Humana, Kaiser, and United — offer national group plans, your options are more limited. Also, you have to consider whether there are in-network providers for the plans you choose.

If you have questions about remote workers in different states, please let us know.