Colorado Employee Health Insurance Requirements

If you are a Colorado employer with fewer than 50 full-time equivalents on your payroll, you aren’t required to offer health insurance at all.

That said, providing employees with at least some health and welfare benefits may be a great idea, and even necessary to attract and retain quality talent.

After all, offering a solid employee health plan is much cheaper than massive turnover!

This article will go over the major rules and requirements that Colorado employers need to be aware of regarding employee group health benefits.

We’ll also discuss two affordable and compelling alternatives to offering a full-fledged group health insurance plan: offering a health sharing plan, and setting up a qualified small employer health reimbursement arrangement, or QSEHRA.

Affordable Care Act Requirements for Employers

Large Employers

Employers with 50 or more full-time employees are required to offer health insurance that meets certain standards.

Among them: qualifying health insurance plans must provide coverage for 10 essential health benefits.

Also, insurers can not deny or charge extra for coverage to people with pre-existing conditions.

That is, employees who sign up for health insurance via an employer group plan within their initial eligibility or open enrollment periods enjoy guaranteed enrollment privileges: they cannot be turned down because of their medical condition or history.

Employers with 50 or more full-time equivalents must extend health insurance to all employees who work 30 or more hours per week, with certain exceptions for seasonal employees. Otherwise, the business must pay significant penalties. However this provision does not apply to employers with less than full-time equivalents.

Also, even if you do offer a group health plan, the law does not require you to extend coverage to their family members, though many employers decide to do so in order to recruit and retain quality employees.

Small Employers and Group Health Insurance

Employers with fewer than 50 employees are not required to offer health insurance, but they may choose to do so.

If you do offer group health insurance, however, it must meet the same standards as health insurance offered by larger employers.

Employees who are not offered health insurance by their employer can purchase coverage directly, by contacting a ColoHealth Personal Benefits manager.

The Ten Minimum Essential Coverages

To qualify under the Affordable Care Act, employee health plans must include these ten essential health benefits: 

• Ambulatory patient services: This includes doctor’s visits, lab tests, and other outpatient care.
• Emergency services: This includes care that is needed when you are sick or injured and cannot wait to see a doctor.
• Hospitalization: This includes care that you receive in a hospital, including stays, surgery, and intensive care.
• Maternity and newborn care: This includes care for pregnant women and their babies, from prenatal care to delivery and postnatal care.
• Mental health and substance use disorder services: This includes services for mental illness, substance abuse, and addiction.
• Prescription drugs: This includes coverage for both generic and brand-name drugs.
• Rehabilitative and habilitative services and devices: This includes services and devices that help people with disabilities or injuries recover or improve their function.
• Laboratory services: This includes tests that are done in a laboratory, such as blood tests, urine tests, and imaging tests.
• Preventive and wellness services: This includes services that help you stay healthy, such as checkups, screenings, and immunizations.
• Pediatric services: This includes care for children, from well-child visits to treatment for illnesses and injuries.

For help selecting a qualified Affordable Care Act group insurance plan, make an appointment with an expert ColoHealth Personal Benefits Manager.

Colorado Minimum Group Size

There is no minimum group size for employee group health insurance in Colorado. You can sponsor a group health insurance plan with guaranteed enrollment with a group as small as two.

The Colorado Option

Additionally, Colorado law requires all health insurance companies that sell group health insurance to employers to also offer so-called Colorado Option health plans. These plans are required to be made available to employers with between 2 and 99 employees.

These are plans that theoretically have lower premiums compared to standard group health insurance plans.

However, early experience with these plans shows that the Colorado Option doesn’t always save employers the most possible money.

There have also been teething problems, as Colorado Option plans have had trouble convincing some Colorado hospitals, clinics, and other providers to join their care networks.

Traditional Group Health Insurance: The Affordability Problem

While traditional health insurance is a very valuable benefit, it’s also very expensive for employer plan sponsors.

There are a number of reasons why group health insurance has become unaffordable for Colorado employers and their workers alike.

• High premiums. The cost of health insurance premiums has been rising steadily in recent years, and this trend is expected to continue. In 2023, the average annual premium for employer-sponsored health insurance was $22,463 for a family of four, an increase of 20% from 2022, according to research from the Kaiser Family Foundation. This increase is due to a number of factors, including rising healthcare costs, increased regulation, and the aging population.
• High deductibles and copays. In addition to high premiums, group health insurance plans often have high deductibles and copays. A deductible is the amount of money that an employee must pay out-of-pocket before their insurance coverage kicks in. A copay is a fixed amount that an employee must pay for each doctor visit or prescription drug. High deductibles and copays can make it difficult for employees to afford to use their health insurance, even when they have coverage.
• Unnecessary coverage. Group health insurance plans often include coverage for benefits that employees do not need or want. This can drive up the cost of the plan without providing any real benefit to employees.
• Inflexibility. Group health insurance plans are often inflexible, which can make it difficult for employers to meet the needs of their employees. For example, employers may not be able to change the plan design or the level of coverage offered. This can be a problem if the needs of their employees change over time.

These factors can make group health insurance unaffordable for many Colorado employers. As a result, some employers are choosing to offer alternative healthcare options to their employees.

Health Sharing: The Affordable Alternative to Traditional Group Health Insurance

Health sharing plans are an affordable, streamlined, and efficient alternative to traditional group health insurance solutions.

They are typically less expensive than traditional health insurance plans—up to 50% less expensive—while offering comparable benefits for large and even catastrophic medical conditions.

These plans work especially well for workforces that are generally young and in good health.

Health sharing plans are not insurance companies, but rather non-profit organizations that pool the resources of their members to pay for medical expenses.

Members share the costs of their medical expenses, and there are typically no co-insurance charges or deductibles.

Health sharing plans also typically offer much more freedom for plan members to choose their own doctors and hospitals compared to traditional group HMOs and PPOs—especially Covered Colorado plans, which often have very limited networks.

The chief drawback to health sharing plans are that they may have waiting periods for certain conditions.

Some of the advantages of health sharing plans include:

• Lower monthly costs than traditional health insurance
• No premiums or deductibles
• Sharing of medical expenses among members
• Freedom to choose providers

Some of the disadvantages of health sharing plans include:

• Limited coverage
• Waiting periods for certain conditions
• No tax deduction for the employee

Qualified small employer health reimbursement arrangements (QSEHRAs)

QSEHRAs (pronounced “cue Saras” in the employee benefits industry) are a tax-advantaged way for employers to help employees pay for health care expenses.

Employers can contribute money to a QSEHRA account, and employees can use the money to buy their own health insurance premiums on the individual market.

As an employer, your contributions to the QSEHRA plan are tax-deductible as compensation expenses.

And there is no tax consequence for the employee who receives benefits under a QSEHRA.

Furthermore, QSEHRAs don’t require you to fund them in advance. You can keep that money in your business as operating capital.

The downside: employees who receive benefits to pay their premiums using a QSEHRA generally don’t get a health insurance subsidy under the Affordable Care Act.

Note: Only companies that do not offer a traditional group health insurance plan may offer a QSEHRA.

Limits: As of 2024, the maximum amount you can contribute to a QSEHRA per employee is QSEHRA limit will be $6,150 for self-only coverage and $12,450 for family coverage.

These amounts change annually to reflect the cost of living.