Ask HR: Do Employers Have to Offer Health Insurance?

SHRM President and Chief Executive Officer Johnny C. Taylor, Jr., SHRM-SCP, answers HR questions each week for USA Today.

Do you have an HR or work-related question you’d like him to answer? Submit it here.

A graphic design company just offered me a new job, and I’m leaning toward taking it, but they don’t offer any health insurance benefits. Is that legal? —Dorian

Johnny C. Taylor, Jr., SHRM-SCP: Congratulations on receiving a job offer! That’s fantastic news. Regarding your concern about health insurance benefits, whether it’s legal for an employer not to offer them depends on certain factors.

If the company has fewer than 50 full-time employees, it is not subject to the Affordable Care Act (ACA), which mandates that employers provide health care benefits or face penalties. For smaller businesses, offering health insurance may be challenging due to budget constraints. In 2023, the average health benefits cost per employee was $13,800, making it a significant expense. Providing such benefits might only be feasible for a smaller employer or startup with limited resources after they grow and become more established.

On the other hand, if the graphic design company has at least 50 full-time equivalent employees, it falls under the ACA regulations and may choose to offer health insurance or pay a penalty to the IRS. The penalty for 2024 is $2,970 per full-time employee (minus the first 30 full-time employees), which is substantially less than the average cost of health care.

If health insurance is a priority for you, there are options available. Many health insurance companies offer standalone plans for individuals and families. Additionally, you can explore purchasing health insurance through HealthCare.gov or your state exchange. I recommend comparing different options to find a plan that fits your budget.

Ultimately, if this job opportunity excites you and aligns with your career goals, don’t allow the absence of health insurance benefits to be the sole deterrent. Alternative solutions are available to ensure you have the coverage you need while pursuing this exciting opportunity.

Best of luck in your decision-making process, and I hope this new job brings you fulfillment and success!

Though I have had positive feedback on my performance since starting my job, I was recently laid off for performance reasons. In fact, this is the first time I’ve been singled out for substandard work, and they didn’t provide any specific details on the standard or my work. Are employers required to give a reason for a layoff? Do I have any recourse if they provide a false reason? —Maya

Johnny C. Taylor, Jr., SHRM-SCP: I am genuinely sorry to hear about your recent layoff. It can be incredibly jarring to learn about perceived substandard work for the first time in the midst of being laid off. Unfortunately, I don’t have the best news for you. While there are some states where your employer may be required to provide an explanation pursuant to state law, an employment contract or collective bargaining agreement, generally speaking, employers can terminate your employment for any nondiscriminatory reason, and they don’t have to tell you why.

Layoffs are often driven by broader business pretexts, such as cost-cutting or organizational restructuring, and may not necessarily reflect the performance of individual employees. Employers should utilize nondiscriminatory criteria when conducting layoffs, considering factors such as seniority, job skills and performance. It is worth noting that employers must also avoid discrimination and ensure fair treatment in the selection process.

You may have legal recourse if you suspect the layoff decision was discriminatory or based on false reasons. Unlawful reasons for a layoff can include pregnancy, age (for those 40 and older), religion and disability. You may also have legal options if the layoff occurred because you exercised your right to certain employment protections, such as workers’ compensation or paid sick leave.

Before considering legal action, I recommend contacting your former HR department to gather more details about the layoff. Understanding the specific reasons behind the decision can provide clarity. Additionally, you may contact the Equal Employment Opportunity Commission, the federal agency responsible for enforcing workplace discrimination laws, to discuss your situation.

There is a marked difference between illegal business conduct and poor business conduct. While you have recourse when impacted by an unlawful employer action, your options are limited when such employer behavior falls short of being illegal. Though a layoff may hurt in the short term, in the long run, you’ll be better off in an employee-employer relationship based on mutual respect.

I sincerely hope you have found new opportunities since your layoff. If you are still in the job market, I wish you the best of luck in your search for stable and meaningful work.