Do you need to have 50% enrollment to offer health insurance?

Do You Really Need 50% Enrollment?

If you're a small business owner, you may have heard that at least 50% of your full-time employees must participate in a company health insurance plan for you to offer one.

The idea behind this requirement is adverse selection—employees with higher health risks are more likely to enroll, while healthier individuals opt out, leading to higher costs for insurance carriers. To mitigate this, insurers impose minimum participation requirements.

You Have Options

While certain carriers do enforce these rules, they’re not universal, and there are legitimate ways to work within them. An experienced insurance broker can help you navigate these options. For instance, PEO plans often account for valid waivers—such as employees being covered under a spouse’s plan—so those waivers don’t count against the 50% threshold. If participation is still too low, alternatives like level-funded or small-group plans offer more flexible requirements.

The Bottom Line

You’re not necessarily stuck if fewer than half of your employees want coverage. Consulting with benefits expert, like ProHealth PEO Advisors, can help you find a solution that fits your business’s needs.