Hiring remote employees gives businesses access to talent well beyond the area surrounding their office. It also creates an important question for employers offering group health insurance:
Will our health plan work for employees who live in other states?
A company headquartered in New Jersey or New York may have employees working in Pennsylvania, Florida, Texas, California, or throughout the country. A health insurance plan with a strong local provider network may work very well for employees near the company’s office but may not provide the same access for someone living hundreds of miles away.
Employers with a remote or multi-state workforce need to consider geography when selecting group health insurance.
Can Group Health Insurance Cover Employees in Different States?
In many situations, yes.
An employer does not necessarily need a separate health insurance plan for every state where an employee lives. Depending on the insurance carrier and plan, employees in multiple states may be able to participate in the same employer-sponsored group health plan.
The important question is whether the plan provides appropriate coverage and access to healthcare providers where those employees actually live.
This is where the provider network becomes particularly important.
Why Provider Networks Matter for Remote Employees
Health insurance plans use networks of doctors, hospitals, laboratories, pharmacies, and other healthcare providers.
Some networks are heavily concentrated in a particular state or region. Others provide broader or national access.
For a business where most employees live near the company’s office, a regional network may work well. Once the company begins hiring remote employees in other parts of the country, that same network may become a problem.
An employee may technically have health insurance while having limited access to in-network doctors and hospitals near home.
Before selecting a plan for a distributed workforce, employers should understand where their employees live and how the plan’s network operates in those locations.
What Is a National Health Insurance Network?
A national health insurance network provides access to participating healthcare providers across a much larger geographic area than a local or regional network.
This can be valuable for companies with employees working in multiple states.
Rather than selecting coverage solely around the employer’s headquarters, the business can consider plans that provide employees with in-network access in the areas where they live.
National network availability varies by insurance carrier and plan. A carrier operating nationally does not necessarily mean every plan offered by that carrier includes the same national network.
The network attached to the specific plan needs to be reviewed.
PPO, EPO and Other Network Types for Multi-State Employees
The type of health plan can also affect how employees receive care outside the employer’s home state.
PPO plans generally provide greater flexibility in accessing providers and may include out-of-network benefits, although the specific network and benefits vary by plan.
EPO plans generally require employees to use participating network providers for non-emergency care. Some EPO plans have broad networks that work well across multiple states, while others may be more geographically limited.
The letters on the plan are only part of the answer.
For an employer with remote workers, the actual provider network and service area can be more important than whether the plan is labeled PPO or EPO.
What Happens When a Business Hires Its First Out-of-State Employee?
This is a good time to review the company’s existing health insurance rather than assuming the current plan will work.
Consider a New Jersey business whose employees have historically lived in New Jersey. The company hires its first remote employee in another state.
Before enrolling that employee, the employer should determine whether the existing plan provides adequate network access where the employee lives and whether the employee satisfies the carrier’s eligibility requirements.
If the current plan does not work well outside the region, the business may need to explore another plan, network, or insurance arrangement.
As the company continues hiring in other states, national coverage can become a larger part of the benefits strategy.
How Level-Funded Health Plans Can Fit a Multi-State Workforce
Level-funded health plans can be another option for some employers with employees in multiple states.
Depending on the carrier and plan, level-funded arrangements may provide access to broad national provider networks. This can make them worth evaluating for companies that have employees spread across several states.
Level-funded plans have their own underwriting, participation, eligibility, and funding considerations, so national network access should not be the only factor used to select one.
For an employer with a distributed workforce, however, network flexibility can be an important advantage when comparing available options.
Should an Employer Choose a National Network for Everyone?
Not necessarily.
A national network can be valuable, but employers should still consider the makeup of their workforce.
If nearly every employee lives in one geographic area and only one employee works remotely, changing the entire company’s health plan may not always be the best answer.
The employer should compare the available options, provider access, premiums, employee needs, and the likelihood of hiring additional remote employees.
A growing company that expects to recruit nationally may make a different decision than a business that expects its workforce to remain primarily local.
What Should Employers Review Before Hiring Remote Employees?
The best time to think about multi-state health insurance is before an out-of-state employee needs to enroll.
Employers should know where eligible employees live, which provider network their current health plan uses, whether that network has adequate access in those areas, and whether there are carrier-specific eligibility or participation requirements for employees outside the company’s home state.
It is also worth looking ahead.
If the company expects to hire employees in additional states, choosing a benefits structure that can accommodate future growth may prevent the employer from having to revisit the same problem with every new hire.
Group Health Insurance Should Reflect Where Your Employees Actually Live
Remote work has changed the geography of many small and mid-sized businesses.
A company can be headquartered in New Jersey or New York while its employees work throughout the country. The health insurance strategy needs to account for that reality.
For employers with remote workers, choosing group health insurance based only on premiums and benefits can leave out an important part of the decision: whether employees can actually access the doctors, hospitals, and healthcare services they need where they live.
At Spencer & Spencer, we help businesses evaluate group health insurance options based on the makeup of their workforce, including companies with remote and multi-state employees.
If your business is hiring outside its home state or already has employees working throughout the country, reviewing network access and available plan options can help determine whether your current health insurance structure still fits the business.