What are the requirements for group health insurance?

Group health insurance comes with two layers of requirements: the carrier’s underwriting rules, which decide whether it will sell you a plan, and the law, which decides what you must do once you have one. Here are both, in the order an employer usually meets them.

1. A business and an employee

Carriers want evidence of a genuine business (a tax ID, a state registration, a payroll record) and at least one eligible employee who is not an owner or an owner’s spouse. On the SHOP Marketplace, healthcare.gov also requires that you have 50 or fewer full-time equivalent employees and offer cover to all full-time employees. We go into who counts in minimum employees for group health insurance.

2. Minimum participation

Carriers ask that a minimum share of eligible employees enroll, so the group is not made up only of people who expect large claims. Around 70% is common, though rules differ by carrier and state, and employees with other qualifying cover usually count as valid waivers.

States can set limits on these rules. Texas, for example, sets out participation and contribution requirements for small employer plans in 28 Texas Administrative Code 26.8. A broker will know the rules where you are.

3. Minimum employer contribution

Most carriers require the employer to pay part of the premium, often at least 50% of employee-only cover. You may choose to pay more, or to contribute to dependents’ cover as well.

The contribution also matters for tax: to claim the small business health care tax credit, the IRS requires the employer to pay at least 50% of the cost of employee-only cover for each employee, through a SHOP plan.

4. Eligibility rules you set

Within the carrier’s rules, you decide:

• Who is eligible, for example employees working 30 or more hours a week.
• The waiting period before cover starts. Federal law caps it at 90 days.
• Dependents. If you offer dependent cover, children must be allowed to stay on until age 26.
• Classes. Some employers treat groups differently (for example salaried and hourly), within nondiscrimination rules.

Apply your rules the same way to everyone in a class. Inconsistency is the most common source of problems.

5. Paperwork once the plan starts

Every group plan comes with documents and notices. For a fully insured plan, the carrier provides much of it, but the employer is still responsible for getting it to employees. Typical items:

• A Summary of Benefits and Coverage for each plan, at enrollment.
• A summary plan description and plan document under ERISA for most private employers.
• A Section 125 premium-only plan document if employees pay their share before tax.
• Marketplace notice to new hires about coverage options.
• Continuation notices when someone leaves (see below).

6. Rules that start at 20 employees

Employers with 20 or more employees in the prior year must offer federal COBRA continuation to employees and dependents who lose cover, according to the Department of Labor. Many states have “mini-COBRA” laws that apply to smaller insured groups, so smaller employers should check too.

7. Rules that start at 50 full-time equivalents

At 50 or more full-time and full-time equivalent employees, you are an applicable large employer under the ACA. You must offer affordable, minimum-value cover to at least 95% of full-time employees and their children, or risk an employer shared responsibility payment, and you file annual information returns with the IRS.

“Affordable” is set each year. For plan years starting in 2027, employee-only cover is affordable if the employee’s share is no more than 10.22% of household income, up from 9.96% in 2026 (reported by Sequoia, July 2026). Employers usually use a safe harbor, such as W-2 wages, because they do not know household income.

A checklist before you ask for quotes

With those answers, a broker can request group health insurance quotes quickly.

This guide is general information, not insurance, tax or legal advice. Requirements vary by state and carrier, and a licensed broker can tell you which apply. The form below finds you one.