In California, employers are not required by state law to offer health insurance to every employee. However, larger employers may be required to provide health coverage under the federal Affordable Care Act (ACA).
While the state does not currently have an employer mandate requiring all businesses to provide health insurance, it creates confusion for employees if their place of work can delay your coverage, deny benefits, treat you differently from other workers, or retaliate against you for asking about health insurance.
Are California Employers Required to Offer Health Insurance?
California does not require every employer to offer health insurance. In fact, small employers with fewer than 50 full-time equivalent employees are generally not required under the ACA to provide coverage.
However, if an employer had an average of at least 50 full-time employees, including full-time equivalent employees, during the prior calendar year, it may qualify as an Applicable Large Employer (ALE) and become subject to federal employer shared responsibility rules.
Under the ACA, an ALE generally must offer minimum essential coverage that is affordable and provides minimum value to full-time employees and their dependents. In simpler terms, smaller businesses usually do not have to offer health insurance, while larger employers may have to offer qualifying coverage or risk federal penalties.
What Counts as a Full-Time Employee?
For ACA purposes, a full-time employee is generally someone who works an average of at least 30 hours per week or 130 hours per month. This does not mean every part-time employee must be offered health insurance. However, part-time hours can still matter when determining whether the employer is large enough to qualify as an ALE.
An employer must count full-time employees and calculate full-time equivalent employees when determining whether it meets the 50-employee threshold. For example, a business may have fewer than 50 full-time employees but still qualify as an ALE if it has enough part-time employees working substantial hours. This is why employee classification and hour tracking matter.
What Type of Health Coverage Must a Large Employer Offer?
Large employers generally must offer health coverage that meets three main standards:
- It must provide minimum essential coverage.
- It must be considered affordable.
- It must provide a minimum value.
Which means the bare minimum that a company’s health plan must provide is at least 60% of the total allowed cost of coverage benefits. If the employer offers coverage that is too expensive, fails to provide minimum value, or excludes a full-time employee who should have been offered coverage, the employer may still face penalties if that employee receives a marketplace premium tax credit.
What Happens If a Large Employer Does Not Offer Health Insurance?
If a large company does not offer qualifying health coverage to enough full-time employees and their dependents, it will result in penalties that can range anywhere between $3,340 and $5,010 depending on the severity of the violation.
For employees, it is important to understand that these penalties are usually enforced through the IRS. A failure to offer health insurance does not automatically mean an employee has a private lawsuit. However, legal issues may exist if the denial of benefits involves discrimination, retaliation, misclassification, unequal treatment, or a violation of the employer’s own written policies.
Can an Employer Offer Health Insurance to Some Employees But Not Others?
In some situations, employers may have different benefit rules for different groups of workers, such as full-time employees, part-time employees, union employees, non-union employees, salaried employees, or hourly employees. However, those rules must be applied lawfully and consistently.
An employer may create legal risk if it denies health insurance because of an employee’s protected characteristic, medical condition, pregnancy, disability, age, protected leave, workplace complaint, or request for legally protected rights. An employer may also create legal problems if they misclassified an employee as part-time or independent contractor to avoid providing benefits.
Employees should pay attention to how they are classified, how many hours they work, what the employee handbook says, and whether similarly situated coworkers are receiving coverage.
Can an Employer Delay Health Insurance Coverage?
If an employee is eligible for the employer’s group health plan, the employer generally cannot impose a waiting period longer than 90 days before coverage becomes effective. This does not require every employer to offer coverage, but it does limit how long eligible employees can be forced to wait once they qualify for the plan.
Employees should review their offer letter, benefits packet, employee handbook, and any written communication from HR. If the employer promised coverage after a certain waiting period but failed to enroll the employee, applied the rule inconsistently, or delayed coverage without explanation, the employee may want to seek legal advice.
What Should Employees Do If Their Employer Does Not Offer Health Insurance?
Employees should first determine whether their employer may be large enough to qualify as an ALE. If the company has fewer than 50 full-time equivalent employees, it may not be legally required to offer health insurance. If the company is larger, federal ACA rules may apply.
Employees should also gather documents related to their employment and benefits, including:
- Offer letters
- Pay stubs
- Work schedules
- Benefits packets
- Employee handbook provisions
- HR emails or messages
- Enrollment notices
- Any written explanation for denied or delayed coverage
These records can help determine whether the issue is simply a benefits eligibility question or whether it may involve misclassification, retaliation, discrimination, or inconsistent treatment.
Common Warning Signs of a Health Insurance Benefits Problem
An employee may want to speak with an employment lawyer if their employer:
- Classifies them as part-time even though they regularly work full-time hours.
- Offers health insurance to similar employees but excludes them.
- Promises benefits during hiring but later refuses to provide enrollment information.
- Delays coverage beyond the stated waiting period.
- Cuts their hours after they ask about benefits.
- Denies coverage after they take protected leave.
- Refuses to provide written benefits information.
- Retaliates after they ask about health insurance or workplace rights.
Not every health insurance dispute is unlawful, but these facts may justify a closer legal review.
Talk to a California Employment Lawyer At WCEL Today
Health insurance is one of the most important benefits employees rely on. While not every California employer is required to offer coverage, larger employers may have federal obligations under the ACA. Employers that do offer health insurance must also apply their policies lawfully and consistently.
If your employer denied health insurance or delayed your coverage, West Coast Employment Lawyers can help. Our employment attorneys can review your situation, explain your rights, and help you determine the best next step.
Contact West Coast Employment Lawyers today at (213) 927-3700 or through our online contact form to schedule a free consultation.
