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Do You Have to Offer Health Insurance to Employees in Pennsylvania?

The short answer, the federal threshold that changes it, and what many small PA employers choose to do anyway.

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The Short Answer

No. Pennsylvania does not have a state law requiring employers of any size to offer health insurance. Whether you are required to offer coverage comes down to a federal rule, not a state one, and it depends on the size of your workforce.

Quick answer: Under the Affordable Care Act, only employers with 50 or more full-time employees (including full-time-equivalent employees) are required to offer health insurance or face a potential penalty. Pennsylvania has no additional state-level requirement on top of that federal threshold.

Under 50 Employees: No Federal Requirement

If your business averages fewer than 50 full-time employees (including full-time-equivalents) over the prior year, the ACA's employer mandate does not apply to you. Offering coverage is your choice, not a legal requirement, and you may also qualify for the Small Business Health Care Tax Credit if you do.

50+ Employees: The Federal Mandate Applies

Once your workforce averages 50 or more full-time employees (including full-time-equivalents), you become an Applicable Large Employer under the ACA and are required to offer minimum essential coverage or face a potential shared responsibility payment.

Even where coverage is not required, many small PA employers choose to offer it anyway to compete for talent, and there is more than one way to do it. We cover the options below.

One PA-Specific Rule Worth Knowing, and Why Many Employers Offer Coverage Anyway

The 50-employee threshold is not the only Pennsylvania rule that matters, and plenty of employers under that threshold choose to offer coverage even though nothing requires it.

Pennsylvania's Mini-COBRA Rule

If your business has between 2 and 19 employees and you already offer group health coverage, Pennsylvania law requires you to offer continuation coverage to employees who lose that coverage, for up to nine months. This is a rule about continuing existing coverage, not a requirement to offer it in the first place.

Why Offer Coverage If You Don't Have To

Health coverage remains one of the top reasons employees choose one small business over another. Employers under the 50-employee threshold often offer it anyway to compete for talent, and there is more than one way to structure that offer.

Two paths most small PA employers consider: a traditional small group health plan, or an ICHRA, which lets you reimburse employees tax-free for a plan they choose themselves instead of managing a group policy.

Frequently Asked Questions (FAQs)

Do I have to offer health insurance to my employees in Pennsylvania?

No. Pennsylvania has no state law requiring employers of any size to offer health insurance. Whether you are required to offer it depends on a federal rule tied to the size of your workforce, not a Pennsylvania one.

What is the ACA's 50-employee threshold, and how is it counted?

The ACA's employer mandate applies once a business averages 50 or more full-time employees, including full-time-equivalent employees, over the prior calendar year. Full-time-equivalents are calculated by combining part-time employees' hours, so a mix of full-time and part-time staff can still add up to the threshold even without 50 individual full-time employees.

Do I have to offer health insurance if I have fewer than 10 employees, or just one?

No. There is no special rule that changes at 10 employees or at one employee. The relevant line is the ACA's 50-employee threshold, and any business below that, including a business with a single employee, is not required to offer coverage under federal or Pennsylvania law.

What happens if I am required to offer coverage and do not?

Employers who average 50 or more full-time employees and do not offer minimum essential coverage may face a shared responsibility payment under the ACA. This applies only to employers that meet the threshold; smaller employers do not face this penalty for not offering coverage.

Can I get any tax benefits for offering coverage even if I am not required to?

Possibly. Employers below the ACA threshold may qualify for the Small Business Health Care Tax Credit when they offer coverage, though eligibility depends on factors like business size and employee wages. An advisor can help you check whether your business qualifies.

What states does HBP serve?

HBP serves small businesses, individuals, and families across Pennsylvania, New Jersey, and Delaware.

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Whether you're required to offer coverage or simply weighing your options, we'll walk through what makes sense for your business.

Compliance & References

Federal ACA Employer Mandate Guidance

The 50-full-time-equivalent-employee threshold discussed on this page is defined by the IRS:

Pennsylvania Mini-COBRA Law

Pennsylvania's continuation-of-coverage requirement for employers with 2 to 19 employees is codified at:

This content is provided for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor to determine how regulations apply to your situation.

Disclosures

We are compensated by the insurance carriers for policies you choose through us. There is no direct cost to you. Compensation may vary by carrier and product. Information on this page is for educational purposes and does not constitute legal, tax, or accounting advice. Please consult your professional advisors about your specific situation. We are licensed to advise clients in Pennsylvania, New Jersey, and Delaware. Contact us to confirm availability in other states.