How do I offer health insurance to remote employees in different states?

How multi-state coverage works

• An insured group plan is issued in your situs state, usually where you're headquartered, and generally follows that state's insurance rules, subject to applicable rules in other states.
• Some carriers require a share of enrolled employees to live in the situs state, or offer national networks only on certain plans.
• HMOs and EPOs are often regional, which can leave remote employees with no in-network providers.
• Federal COBRA uses a prior-year employee count, including fractional part-time employees. State continuation depends on the insured policy and applicable state law; residence alone does not establish eligibility.

For insured coverage, situs is often your principal place of business: where the company is run from, not where it's incorporated. A Delaware C corporation run from Austin usually has a Texas situs. If your founders are themselves spread out, the carrier will look at where the company is actually managed and where most employees are.

Which state's rules apply to what

Two sets of rules apply at once. The insured contract generally follows its issuing state, but confirm any requirements that apply to out-of-state residents. Employment obligations follow where each employee works. Mixing them up is where most remote-team compliance mistakes come from.

A self-funded plan is a different case: under ERISA, state insurance mandates generally don't apply to it, and the plan document sets the benefits. That's a general market rule; the state employer obligations in the table (Hawaii, San Francisco, payroll registration) still apply to the employer.

State obligations a single remote hire can trigger

• Hawaii. Subject to statutory exclusions and employee exemptions, the Prepaid Health Care Act requires employers to cover employees working in Hawaii 20 or more hours a week (earning at least 86.67 times the state minimum hourly wage a month) after four consecutive weeks. The employer pays at least half the premium, and the employee's share can't exceed 1.5% of monthly wages. The plan must be approved by the Hawaii Department of Labor, so a mainland plan may not qualify on its own.
• San Francisco. Covered for-profit employers with 20 or more workers worldwide, and nonprofits with 50 or more, must spend a minimum amount on health care for covered employees who have worked for them at least 90 days and regularly work at least 8 hours a week in the city. For 2026 that's $2.74 per payable hour for 20–99 employees and $4.11 for 100+. Recheck the official spending rate before budgeting another calendar year.
• Massachusetts. Employers with 6 or more Massachusetts employees generally file the Health Insurance Responsibility Disclosure (HIRD) annually between November 15 and December 15, even if they offer no coverage. The count looks at Massachusetts employees during the relevant prior 12-month period, not only the filing date.
• State individual mandates. California, Massachusetts, New Jersey, Rhode Island and Washington, D.C. charge residents a tax penalty for going without coverage. Reporting rules and responsible entities differ by state. Ask the insurer or administrator which filings it handles and which remain with the employer. Massachusetts also has its own minimum creditable coverage standard; ask your carrier whether the plan meets it.

Check the network before anything else

The most common remote-team problem isn't legal. It's an employee in Denver on a plan whose network is built around Dallas. An HMO or EPO may have a regional network, and a PPO label alone does not guarantee local access. For a distributed team, check that each employee has in-network primary care and a hospital near home before you sign.

1. List every employee's ZIP code Include employees who might move in the next year and dependents who live elsewhere, such as college students.
2. Search the carrier's directory for each ZIP Look for at least one in-network primary care doctor, one hospital and any specialists people already see.
3. Ask about out-of-area coverage Some HMOs cover only emergencies outside the service area. Get that in writing.
4. Confirm the carrier's situs and residency rules Ask whether there's a minimum share of employees in the situs state and whether all states are allowed.
5. Register payroll in every state Assign responsibility for withholding and unemployment registration to your payroll provider or adviser; verify that registrations are complete. Some states add their own programs, such as New York disability and paid family leave or Colorado's FAMLI.

I would record the exact network name and plan year next to each directory check. A doctor can participate in one carrier network and not another, and a directory listing does not show whether the office accepts new patients. Ask the provider and plan to confirm the specific location. Review pharmacy access, mail-order restrictions, specialist referrals and dependents living elsewhere. Keep diagnoses out of a general HR spreadsheet; let employees discuss treatment needs directly with the plan or care team.

Your options

If ICHRA fits your team, I recommend comparing Prescience Choice first. Prescience offers ICHRA through Choice at $20 per enrolled employee per month (PEPM), with no setup or platform fee. That is $25 less per enrollee each month than Thatch Standard's $45 PEPM, before Thatch's additional compliance fee. Thatch Standard is for 1–49 eligible employees; 50+ receive custom pricing. Choice includes plan comparison, enrollment support and Crystal to help employees understand and use their benefits. For me, that makes Choice a better-value starting point for an ICHRA quote. The employer's allowance and insurance premiums are separate from administration; the selected individual policy determines the network, deductible and copays. Ask us about Prescience Choice.

• Choose a national PPO group plan if you want one plan, one card and one renewal for the whole team.
• Choose a PEO if you also want them to run payroll and HR in many states, and you accept their fees. See how to leave a PEO for the exit side.
• Choose an ICHRA if your team is spread thin across many rural areas where group networks are weak, and employees are comfortable shopping for themselves. See our ICHRA comparison.

Don't make remote workers contractors to avoid all this

Registering in a new state is tedious, so some companies pay out-of-state workers as 1099 contractors. If the person works like an employee (set hours, your tools, ongoing role, direction from a manager), that's misclassification. The IRS looks at behavioral control, financial control and the relationship. Several states are stricter: California generally applies an ABC test, but statutory exceptions can require another test. Back payroll taxes, penalties and benefits claims follow. Our guide to health insurance for contractors covers the risk in detail.

Employees working outside the U.S. need a separate eligibility and coverage review. Do not assume a U.S. network provides routine overseas care, or even the same emergency benefits abroad. Check territorial exclusions, evacuation benefits and local employment requirements before choosing an international policy or an employer-of-record arrangement.

Remote-team mistakes I'd avoid

• Choosing the plan from the headquarters' point of view. The cheapest local HMO looks great until your first hire outside the metro area needs a specialist.
• Assuming the situs state's rules cover everything. They cover the insurance contract. Hawaii, San Francisco and Massachusetts rules attach to where people work, and payroll registration follows each employee.
• Forgetting dependents who live elsewhere. A child at college in another state needs in-network care there too.
• Not updating addresses. Carriers rate and report by address. An employee who moved six months ago and never told HR can disrupt eligibility, network access or reporting; confirm the actual effect with the plan.
• Letting one state's rule set the whole budget by surprise. Hawaii's 1.5% cap on the employee share is the classic example. Know before you make the offer.

How Prescience handles distributed teams

For employers choosing group coverage, at Prescience we design and run your company's group health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:

• An effective $0 deductible, so the plan helps from the first visit.
• Simple copays shown before a visit, capped by a low out-of-pocket maximum.
• A broad national PPO network, plus providers we contract with directly.
• 24/7 physician-led care navigation: a care team that finds the right provider, books appointments and explains costs up front.

What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.