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

Source: https://www.getprescience.com/guides/health-insurance-for-remote-employees
Author: Aditya Jain, MD, Cofounder and COO, Prescience
Published: 2026-11-01
Updated: 2026-11-01
Cite as: Aditya Jain, MD. "How do I offer health insurance to remote employees in different states?." Prescience, November 1, 2026. https://www.getprescience.com/guides/health-insurance-for-remote-employees

A remote team may be able to use one group health plan if employees and dependents are eligible and have usable networks where they live. For insured coverage, the issuing state matters, but it does not answer every state-law question. I would check the policy, each work location and provider access before promising nationwide coverage.

- **Plan issued in:** Your situs (home) state
- **What matters most:** Network where employees live
- **Best fit:** National PPO network
- **Prescience coverage:** Broad national PPO network

## 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.

**What follows the plan vs. what follows the employee**

| Topic | Governed by | What it means for a remote team |
| --- | --- | --- |
| Mandated benefits in an insured plan (for example, fertility or autism coverage) | Situs state | Check the policy and any resident-state requirements; do not promise identical access from a benefit mandate alone |
| Small group size definition | Situs state | State-specific. Colorado changed to 1–50 in 2026, with a transition option for certain existing 51–100 policies |
| State continuation ("mini-COBRA") for groups under 20 | Situs state | Confirm the policy's continuation provisions and applicable state jurisdiction |
| Federal COBRA, ACA market reforms, 90-day waiting period | Federal law | Same everywhere |
| Employer health coverage mandates (Hawaii) and spending rules (San Francisco) | Where the employee works | Can apply to a single remote employee |
| State individual mandates (CA, MA, NJ, RI, DC) | Where the employee lives | Employee must have qualifying coverage; coverage is reported to the state |
| Payroll tax, unemployment and workers' comp registration | Where the employee works | Register in each state where you have an employee |

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.

**One remote employee in Hawaii**

Illustrative. An employee in Honolulu works 40 hours a week and earns $5,000 a month. The single premium on the employer's plan is $700 a month.

- Maximum employee share: 1.5% × $5,000: $75
- Half the premium: $350
- Employee pays the lower of the two: $75
- Employer pays at least: $625 a month

If your usual rule is "employees pay 30% of the premium", it does not work for this hire under the stated assumptions, absent an applicable exemption. The employer covers everything above 1.5% of wages, and the plan must be one Hawaii has approved.

**One remote employee in San Francisco**

Illustrative. A covered 30-person for-profit company has one nonexempt full-time San Francisco employee who has completed 90 days in 2026. Assume 160 covered hours in the month.

- Rate for 20–99 employees (2026): $2.74 per hour
- Hours counted: 160 (assumed)
- Minimum monthly health spend: $438.40
- Employer's premium contribution (assumed): $657

An employer contribution of $657 a month to the group plan for this employee already exceeds the requirement. If the employee waives coverage, the company still has to make a qualifying expenditure, for example into the city's SF City Option program, unless an exemption applies. A voluntary waiver must meet the city's requirements, including qualifying other employer-provided coverage; merely declining your plan is not enough.

## 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](https://www.getprescience.com/get-started).

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** For teams spread thin across many states, Choice lets each person buy a plan built for where they live, with one allowance policy and $20 per enrolled employee per month.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

**Covering a distributed team**

| Option | Works for remote teams? |
| --- | --- |
| Regional HMO | Poorly; network may not reach other states |
| National PPO group plan | Potentially; check service area, providers and dependent access |
| PEO master plan | Usually, with the PEO's fees and renewals |
| ICHRA | Can work if suitable individual policies are available locally; employees enroll in their own coverage |
| Prescience | Broad national PPO network; verify the proposed plan for each location |

- **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](https://www.getprescience.com/guides/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](https://www.getprescience.com/compare/ichra-alternative).

**Compare coverage where your employees actually live**

Use home ZIP codes and family tiers in the census. Compare the written plan's network and employee costs across those locations before choosing a national label or an allowance.

[Quote my distributed team](https://www.getprescience.com/quote)

[Export the employee census](https://www.getprescience.com/integrations)

## 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](https://www.getprescience.com/guides/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.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** Want one plan, one card and one renewal for the whole distributed team? Diamond is built on a broad national PPO network plus providers we contract with directly.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

## Frequently asked questions

**Can one health plan cover employees in multiple states?**

A plan may cover employees across states if eligibility and service-area rules permit. For an insured plan, the issuing state matters, but other applicable state requirements and local provider access still need review.

**Do I need a different plan for each state?**

Usually not, if the plan's network is national. Regional HMOs are the main exception.

**What is a situs state?**

The state where the group policy is issued, normally your principal place of business. Its insurance laws govern an insured plan.

**Do I have to offer the same plan to remote and office employees?**

You can offer different plans to bona fide classes, including by location, as long as the classes aren't a way to favor highly paid people. Most small teams use one plan.

**What if one employee lives in Hawaii?**

Hawaii's Prepaid Health Care Act applies to employees working there 20+ hours a week. You'll need a Hawaii-approved plan, and their premium share is capped at 1.5% of wages.

**Does COBRA apply to remote employees?**

Federal COBRA generally uses the prior-year 20-employee test, with part-time workers counted fractionally. For smaller groups, check whether the insured policy and state law provide continuation; it is not guaranteed in every state.

**What happens when an employee moves states mid-year?**

With a national network, usually nothing changes except their address. With a regional HMO, a move out of the service area is often a qualifying event to change plans.

**Can I pay remote employees a stipend instead?**

Yes, as taxable pay. You can't reimburse their individual premiums tax-free outside a QSEHRA or ICHRA. See our [stipend guide](https://www.getprescience.com/guides/health-insurance-stipend).

**Does Prescience cover remote employees?**

Prescience offers a broad national PPO network plus directly contracted providers. Check the proposed plan's eligibility and local provider access for each employee before enrollment.

## Sources

- [Thatch, Standard pricing checked October 15, 2026 (1–49 eligible employees; 50+ custom)](https://thatch.com/pricing)
- [U.S. Department of Labor, COBRA continuation coverage](https://www.dol.gov/general/topic/health-plans/cobra)
- [Hawaii Department of Labor, Highlights of the Hawaii Prepaid Health Care Law (rev. 06/2026)](https://labor.hawaii.gov/dcd/files/2023/05/Highlights-of-the-Hawaii-Prepaid-Health-Care-Law-rev-2026.06.pdf)
- [Massachusetts DOR, TIR 26-1: Individual mandate penalties for tax year 2026](https://www.mass.gov/technical-information-release/tir-26-1-individual-mandate-penalties-for-tax-year-2026)
- [IRS, Independent contractor (self-employed) or employee?](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee)
- [Colorado General Assembly, SB24-073 small-employer definition](https://www.leg.colorado.gov/bills/SB24-073)
- [San Francisco, Official 2026 HCSO poster](https://media.api.sf.gov/documents/2026_HCSO_Poster_Dec2025.pdf)
- [Massachusetts, HIRD and premium assistance employer guidance](https://www.mass.gov/doc/what-employers-need-to-know-about-masshealth-premium-assistance-programs-0/download)
- [DOL, ERISA overview](https://www.dol.gov/general/topic/health-plans/erisa)
- [California FTB, Individual health mandate and exemptions](https://www.ftb.ca.gov/file/personal/filing-situations/health-care-mandate/personal.html)
- [New Jersey, Individual mandate exemptions](https://www.nj.gov/treasury/njhealthinsurancemandate/exemptions.shtml)
- [Rhode Island official Marketplace, Individual mandate](https://healthsourceri.com/mandate/)
- [DC Health Link, Individual responsibility requirement and exemptions](https://www.dchealthlink.com/individual-responsibility-requirement)
- [San Francisco OLSE, HCSO employee voluntary waiver requirements](https://media.api.sf.gov/documents/277._Employee_Voluntary_Waiver_Form_English_-_2018_update_Final.pdf)