Work out the anchor state first

Insured health plans answer to state regulators, and a small-group plan is written under the rules of one state. For an employer with staff in several states, HealthCare.gov’s SHOP guidance points to the state of the primary business site. A remote startup may have no obvious site, so work out where its primary business site is, keep that answer consistent across payroll, tax filings and insurance applications, and have the insurer confirm which state’s rules the plan follows.

The choice has knock-on effects. California’s small-group law is aimed at employers whose employees mostly work in California, so a startup with two founders in San Francisco and most of its team elsewhere fits California’s small-group rules less neatly than a local company does. Colorado shows a different pattern, applying its small-group rules whenever the employer’s primary business location is in Colorado, wherever the staff live. Each state draws its own line, so read the rules where your anchor sits.

Check networks where people actually live

With the anchor state worked out, a single group plan only works if its network reaches every teammate. Benefits guidance cautions that a nationally marketed plan may still have few in-network providers in some regions. Ask each person which doctors and hospital they use, and search the carrier’s provider directory for those names before enrollment, not after the first claim. Pay particular attention to anyone outside a major metro area and to anyone in ongoing specialist care.

Repeat the check whenever someone relocates or a new hire joins from a state the team has not covered before, and keep a simple roster of each person’s state and ZIP code. The same roster feeds the workers’ comp and payroll questions further down this page, so one list serves all three.

When an HRA fits better than one plan

CMS lists a workforce spread across several states among the reasons an employer might choose a CHOICE Arrangement, the arrangement formerly called an ICHRA, over a group plan. Each employee buys individual coverage that suits their area, and the startup sets the allowance. Under 50 employees, a QSEHRA is the other option, as long as the company offers no group health plan of any kind, dental and vision included. The trade-offs are laid out in ICHRA and QSEHRA for startups.

Location matters inside an HRA too. For a startup subject to the employer mandate, ICHRA affordability is measured against the lowest-cost silver self-only plan where each employee lives, so the same allowance can test differently from one teammate’s home to another’s. A safe harbor lets the employer use the primary work site instead, which brings the anchor-state question back again.

Continuation and notices follow the plan

When someone leaves, the continuation rules depend on the plan and its size. Federal COBRA generally applies once the employer had 20 or more employees in the prior year. Cal-COBRA covers smaller groups, and for larger employers it can extend federal COBRA to a combined total of up to 36 months when the group policy was issued in California. The anchor state therefore shapes what a departing remote employee is offered as well as what they get while employed.

A group plan also brings documents, such as the Summary of Benefits and Coverage and the summary plan description, that reach employees wherever they live. Our guide to small employer benefits rules sets those out.

Workers’ comp for a team with no office

With no office, every employee is a home-based employee, and each one’s state matters to the policy. Law-firm guidance describes coverage as needing to meet the law of the state where the employee’s work is localized, which for a remote hire is generally their home state. Broker guidance adds that a permanent remote employee’s state belongs in the list of states where the policy fully applies, not in the other-states section meant for incidental work such as a short trip.

Broker guidance lists four states, North Dakota, Ohio, Washington and Wyoming, where workers’ compensation comes only from a state fund, so a hire there needs that fund’s coverage. Some policies exclude remote employees in other states outright. Tell us about each new state before the start date; we request the change, and the insurer decides how it is written. Our workers’ compensation page has more on the policy itself.

Employment and cyber exposures of a distributed team

A remote startup manages people under several states’ employment rules at once, so employment practices liability is worth reviewing alongside the first out-of-state offer. Company data also lives on laptops and home networks rather than behind one office firewall, which is where cyber insurance underwriting questions concentrate. Our guide to insurance changes for remote teams goes through both, and the insurance for startups page maps the D&O and technology E&O questions that come with funding and enterprise customers.

Teammates outside the US

Remote-first hiring often crosses a border sooner than planned. A hire in another country starts from that country’s public system and whatever its law asks an employer to contribute, and the hiring route decides who enrolls them. Our guides to hiring your first employee abroad and international health insurance for remote employees cover that side, with a page for each country.

A US employee who decides to work from another country for a stretch raises different questions again, covered in health coverage for employees who travel or relocate abroad. Where an employee is taxed and treated as employed can change with a move, so check with a local adviser or tax professional before approving one.

Requesting an introduction

Use the quote form on this page with a simple roster: the state or country each person works from, the number of people in each and whether partners and children should be included. We will send it on to a benefits partner that handles remote-team and international health coverage, and the partner and the insurer decide eligibility, plans and pricing. For workers’ comp, EPLI and cyber, we request the quotes ourselves and each insurer sets terms after its review. The employee benefits hub lists every guide in this section.

A few useful answers

Common questions

Which state’s rules apply to a fully remote startup’s group health plan?

Generally the state of the primary business site. HealthCare.gov’s guidance for SHOP employers with workers in several states is to enroll there and pick a plan with a multi-state or national network. Individual states draw their own lines, so the answer can differ by state.

Why do remote-first startups look at ICHRAs?

CMS names a workforce spread across several states as one reason to use a CHOICE Arrangement, formerly called an ICHRA. Each employee buys individual coverage where they live, so the company is not relying on one network to reach everyone.

Does a private workers’ comp policy cover an employee who works from home in Ohio?

No. Ohio is one of four monopolistic states, with North Dakota, Washington and Wyoming, where workers’ compensation comes only from the state fund. A hire there needs that fund’s coverage.

Can employees abroad join a US startup’s health plan or HRA?

They generally start with their own country’s public system and any scheme a local employer pays into. For an ICHRA, CMS lists individual health insurance bought on or off the Marketplace and Medicare as qualifying cover, and a foreign public scheme is not on that list, so a hire abroad usually starts from the local system and the hiring setup instead.

How do I start a benefits introduction for a remote team?

Use the quote form and list where each person works and how many people are in each place. We pass it to a benefits partner for remote-team and international health coverage, and the partner and the insurer decide eligibility, plans and pricing.

Benefits for Fully Remote Startups