Can Employers Require Employees to Have Health Insurance in Washington State?

In the realm of employment law, the question of whether employers can mandate health insurance for their Washington state employees has sparked a complex legal debate. While some states grant employers the authority to impose such requirements, Washington law presents a unique landscape that warrants careful consideration. This article delves into the intricate legal framework governing employer-mandated health insurance in Washington, exploring the nuances and exceptions that shape this contentious issue.

Washington has long held the distinction of being one of the few states that explicitly prohibits employers from requiring employees to have health insurance as a condition of employment. This prohibition is enshrined in the Washington Health Care Authority’s “Employer Mandate Act” (ESHB 1987), which unequivocally states that “no employer may require an employee to have health coverage as a condition of employment.” This prohibition extends to all employers, regardless of their size or industry, and applies to both full-time and part-time employees.

The rationale behind Washington’s prohibition on employer-mandated health insurance is multifaceted. Firstly, it safeguards employee autonomy and freedom of choice. By prohibiting employers from dictating health insurance coverage, Washington empowers employees to make decisions that align with their individual circumstances and preferences. Secondly, it fosters competition within the healthcare marketplace. By allowing employees to choose their own health insurance providers, the prohibition encourages insurers to offer competitive plans and services, thereby driving down costs and improving the quality of care.

Employer Health Insurance Requirements in Washington State

### Employer Coverage Mandate

Washington State’s Health Care Reform Act, also known as Initiative 1115, established an individual mandate requiring all Washington residents to have health insurance coverage. This mandate also applies to employers with 50 or more employees. Employers covered by the mandate must offer health insurance coverage to their employees and their dependents. The coverage must meet certain minimum standards, including:

– Providing coverage for a comprehensive range of health care services, including preventive care, hospitalization, and prescription drugs.
– Setting premiums and deductibles at reasonable levels that are affordable to employees.
– Providing access to a network of health care providers that is adequate to meet the needs of employees and their dependents.

Employers who fail to offer health insurance coverage to their employees may be subject to penalties. The penalty for non-compliance is $1,000 per employee, per year.

### Employer Contribution Requirements

In addition to the coverage mandate, Washington State also has an employer contribution requirement. Employers with 50 or more employees must contribute at least 65% of the cost of health insurance premiums for their employees. This contribution requirement helps to ensure that employees have access to affordable health insurance coverage.

### Exceptions to the Employer Mandate

There are a few exceptions to the employer health insurance mandate. Employers who are covered by the mandate are not required to offer health insurance coverage to:

– Employees who are eligible for Medicare or Medicaid.
– Employees who are covered by another employer’s health insurance plan.
– Employees who are employed for less than 6 months.
– Employees who work less than 30 hours per week.

### Penalties for Non-Compliance

Employers who fail to comply with the employer health insurance mandate may be subject to penalties. The penalty for non-compliance is $1,000 per employee, per year. The penalty may be reduced if the employer can demonstrate that they made a good faith effort to comply with the mandate.

### Reporting Requirements

Employers who are covered by the employer health insurance mandate must report their compliance with the mandate to the Washington State Health Care Authority. The reporting deadline is March 1st of each year. Employers who fail to report their compliance may be subject to a penalty.

### Enforcement

The Washington State Health Care Authority is responsible for enforcing the employer health insurance mandate. The Health Care Authority may investigate complaints of non-compliance and may impose penalties on employers who fail to comply with the mandate.

### Additional Resources

For more information about the employer health insurance mandate, please visit the following websites:

– [Washington State Health Care Authority](https://www.hca.wa.gov/)
– [Washington State Bar Association](https://www.wsba.org/)

Understanding the Law’s Scope and Exemptions

In Washington State, employers have certain obligations and exemptions regarding health insurance coverage for their employees. The Health Benefit Authority (HBA) establishes these requirements and provides guidance for compliance.

Exemptions from Health Insurance Requirements

Several exemptions apply to the health insurance requirement in Washington State. These include:

Number of Employees: Employers with fewer than 50 employees are exempt from the health insurance mandate.
Certain Industries: Employers in the hospitality industry, such as hotels and restaurants, are partially exempt. They must offer coverage to full-time employees who work more than 20 hours per week but are not required to pay for employee contributions.
Religious Beliefs: Employers cannot require employees to have health insurance that violates their religious beliefs.
Severance Pay: If an employee receives a severance package that includes health insurance coverage for a period of time, the employer is exempt from providing health insurance during that period.
Union Agreements: Employers are exempt from the health insurance requirement if they have a collective bargaining agreement that provides health insurance coverage to employees.

Exemption for Religious Beliefs

The religious beliefs exemption is based on the First Amendment of the U.S. Constitution, which protects religious freedom. To qualify for this exemption, an employee must provide a written statement from a religious leader or organization confirming their sincere religious beliefs against health insurance.

Employers cannot discriminate against employees based on their religious beliefs. If an employee requests an exemption based on religious beliefs, the employer must grant it and provide an alternative accommodation if possible, such as a different health insurance plan that does not violate the employee’s beliefs.

Partial Exemption for Hospitality Industry

The partial exemption for the hospitality industry was created to address the unique challenges faced by businesses in this sector. These businesses often have high employee turnover and a large number of part-time workers.

Under the partial exemption, hospitality employers must offer health insurance coverage to full-time employees who work more than 20 hours per week. However, they are not required to pay for employee contributions. This means that employees in the hospitality industry may have to pay for some or all of their health insurance premiums.

The following table summarizes the health insurance exemptions in Washington State:

Exemption	Details
Number of Employees	Employers with fewer than 50 employees are exempt.
Hospitality Industry	Partially exempt; must offer coverage to full-time employees working more than 20 hours, but not required to pay for employee contributions.
Religious Beliefs	Employees can claim exemption based on sincere religious beliefs against health insurance.
Severance Pay	Employers are exempt while providing health insurance coverage through severance packages.
Union Agreements	Employers are exempt if covered by a collective bargaining agreement that provides health insurance.

Employer Mandate

In 2018, the individual mandate of the Affordable Care Act (ACA) was repealed. However, the employer mandate remains in effect. This means that most employers with 50 or more full-time equivalent employees (FTEs) must offer health insurance to their employees.

There are a few exceptions to the employer mandate. For example, employers who are religious objectors or who have a small number of employees may not be required to offer health insurance. In addition, certain types of businesses, such as churches and small businesses, may be exempt from the mandate.

Penalties for Noncompliance with Health Insurance Mandate

If an employer fails to comply with the employer mandate, they may be subject to penalties. The penalty for noncompliance is $2,000 per full-time employee, up to a maximum of $500,000 per year. The penalty is imposed on the employer, not on the individual employees.

Exceptions to the Penalty

There are a few exceptions to the penalty for noncompliance. For example, employers who are religious objectors or who have a small number of employees may not be subject to the penalty. In addition, certain types of businesses, such as churches and small businesses, may be exempt from the penalty. If an employer believes that they qualify for an exception to the penalty, you can file a coverage exemption request with the IRS.

IRS Audits

The IRS may conduct audits to enforce the employer mandate. The IRS may request information from employers about their health insurance coverage and may impose penalties on employers who are not in compliance.

Reporting Requirements

Employers who are subject to the employer mandate must file an annual report with the IRS. The report must be filed on Form 1095-C and must include information about the health insurance coverage that was offered to employees.

Employer Mandate: Key Points

Here are some key points about the employer mandate:

The employer mandate requires most employers with 50 or more FTEs to offer health insurance to their employees.
The penalty for noncompliance is $2,000 per full-time employee, up to a maximum of $500,000 per year.
There are a few exceptions to the employer mandate, such as for religious objectors and small businesses.
The IRS may conduct audits to enforce the employer mandate.
Employers who are subject to the employer mandate must file an annual report with the IRS.
The employer mandate is a complex law, and employers should consult with an attorney or tax professional to ensure compliance.

Table of Penalties for Noncompliance with Health Insurance Mandate

The following table summarizes the penalties for noncompliance with the employer mandate:

Number of Employees	Penalty per Employee	Maximum Penalty
50-99	$2,000	$200,000
100 or more	$2,000	$500,000

Exemptions to the Health Insurance Mandate

The Health Insurance Mandate, part of the Affordable Care Act, generally requires employers to offer health insurance to full-time employees. However, certain exemptions apply in Washington state.

1. Small Employers

Employers with fewer than 50 full-time equivalent employees (FTEs) are exempt from the mandate.

2. Religious Employers

Employers with religious objections to health insurance are exempt.

3. Governmental Entities

Federal, state, and local government agencies are exempt.

4. Large Employers with Self-Insured Plans

Employers with 50 or more FTEs may opt out of the mandate if they offer a self-insured health plan that meets certain requirements.

5. Other Exemptions

Other exemptions may apply in specific circumstances, including:

Seasonal or temporary workers serving less than 120 days per year
Employees covered by a religious healthcare plan
Employees receiving healthcare subsidies from the state
Employees receiving employer-sponsored health insurance through a collective bargaining agreement
Employees working for employers who can demonstrate financial hardship
Employees who are eligible for Medicare or Medicaid
Employees who have a conscientious objection to health insurance
Employees who receive military health benefits
Employees who are members of an Indian tribe
Students employed by their educational institution

The exemption for financial hardship requires employers to meet specific criteria, such as having a net income that is less than 80% of the federal poverty level.

Employers seeking an exemption must apply to the Washington State Health Care Authority. The application process and criteria vary depending on the type of exemption.

It’s important for employers to consult with an attorney or insurance professional to determine if an exemption applies to their specific situation.

Employee Rights and Responsibilities under the Mandate

1. Employer Responsibilities

Employers in Washington State are required to provide health insurance to their employees who work more than 19 hours per week unless the employer employs less than 25 employees.

2. Employee Exemptions

Employees may be exempt from the health insurance mandate if they:

Are employed by an employer with less than 25 employees
Work less than 20 hours per week
Are covered by a spouse or parent’s health insurance plan
Are eligible for Medicare or Medicaid
Are incarcerated or involuntarily committed
Are seasonal or temporary workers
Are religious objectors

3. Employee Responsibilities

Employees are required to provide their employers with proof of health insurance coverage within 30 days of starting employment.

4. Employer Penalties

Employers who fail to comply with the health insurance mandate may be subject to fines or penalties. The amount of the penalty will vary depending on the size of the employer and the number of employees who are not offered health insurance.

5. Employee Penalties

Employees who fail to have health insurance coverage may be subject to a tax penalty. The amount of the penalty will vary depending on the employee’s income and the number of months they are uninsured.

6. Employer Health Plan Requirements

Employer-sponsored health plans must meet certain minimum requirements, including:

Covering essential health benefits
Providing access to a range of healthcare providers
Limiting out-of-pocket costs

7. Individual Mandate

In addition to the employer mandate, Washington State also has an individual mandate. This means that all residents of Washington State are required to have health insurance coverage. Residents who do not have health insurance may be subject to a tax penalty.

8. Waivers and Exemptions

There are a number of ways to obtain a waiver or exemption from the health insurance mandate. These include:

Hardship exemptions
Religious exemptions
Cost exemptions
Short-term coverage
Grandfathered plans
Indian Health Service plans
Veterans’ health plans

The following table provides a summary of the employee rights and responsibilities under the Washington State health insurance mandate:

Employee Rights	Employee Responsibilities
Right to health insurance coverage from employer	Provide proof of health insurance coverage to employer
Right to choose health insurance plan	Pay for health insurance premiums
Right to health insurance benefits	Comply with health insurance plan requirements
Right to file a complaint if employer does not provide health insurance	Pay tax penalty if uninsured

Employer Health Insurance Plans: Premium Sharing

Employee Premium Sharing

Employers may require employees to pay a portion of their health insurance premiums. The amount that employees are responsible for can vary depending on the plan and the employer’s contribution policy.

Limits on Employee Premium Sharing

There are limits on the amount that employers can require employees to pay for health insurance premiums. These limits are set by the Affordable Care Act (ACA). For 2023, the maximum amount that an employer can require an employee to pay for health insurance premiums is 9.12% of their household income.

Employer Contribution Requirements

In addition to the limits on employee premium sharing, the ACA also requires employers to make a minimum contribution to their employees’ health insurance premiums. The amount of the employer contribution is based on the number of employees and the plan design.

Employer Health Insurance Plans: Premium Sharing Impact on Cost Sharing

The amount that employees pay for health insurance premiums can impact their cost-sharing responsibilities. Cost sharing refers to the out-of-pocket costs that employees pay for health care services, such as deductibles, copayments, and coinsurance.

In general, employees who pay a higher percentage of their health insurance premiums will have lower cost-sharing responsibilities. This is because the employer’s contribution to the premium will help to offset the cost of medical expenses.

Health Savings Accounts (HSAs)

Health savings accounts (HSAs) are tax-advantaged savings accounts that can be used to pay for qualified medical expenses. HSAs are available to individuals who are enrolled in a high-deductible health plan (HDHP).

Employees who contribute to an HSA can reduce their taxable income. Additionally, withdrawals from an HSA are not taxed if they are used to pay for qualified medical expenses.

Flexible Spending Accounts (FSAs)

Flexible spending accounts (FSAs) are another type of tax-advantaged savings account that can be used to pay for qualified medical expenses. FSAs are available to employees who are enrolled in any type of health plan.

Employees who contribute to an FSA can reduce their taxable income. However, withdrawals from an FSA are taxed if they are not used to pay for qualified medical expenses.

Employer Health Insurance Plans: Premium Sharing Options

Employers have several options for sharing the cost of health insurance premiums with their employees. These options include:

Flat dollar amount
Percentage of premium
Tiered contribution
Combination of options

Employer Health Insurance Plans: Premium Sharing Impact on Employee Compensation

The cost of health insurance premiums can impact employee compensation. Employers who pay a higher percentage of their employees’ health insurance premiums will have lower overall employee compensation costs.

Conversely, employers who require employees to pay a higher percentage of their health insurance premiums will have higher overall employee compensation costs.

Impact on Employee Recruitment and Retention

The cost of health insurance premiums can also impact employee recruitment and retention. Employees who are required to pay a higher percentage of their health insurance premiums may be less likely to join or stay with an employer.

Conversely, employers who offer affordable health insurance plans may be more likely to attract and retain employees.

Employer Health Insurance Plans: Premium Sharing Wrap Up

The cost of health insurance premiums is a significant factor for both employers and employees. Employers must carefully consider their premium sharing strategy to ensure that they are meeting the needs of their employees and their business.

Employees should also carefully consider the cost of health insurance premiums when making employment decisions. It is important to choose an employer that offers an affordable health insurance plan that meets your needs.

Year	Maximum Employee Premium Sharing
2023	9.12% of household income

Employer Coverage Options

Employers in Washington State have several options for providing health insurance coverage to their employees. These options include:

Group Health Insurance: Employers can purchase group health insurance plans for their employees through insurance companies. These plans typically offer a range of coverage options and premium costs.
Self-Insured Health Plans: Employers can also choose to self-insure their health plans, meaning they assume the financial risk for providing coverage to their employees. Self-insured plans offer more flexibility and potential cost savings, but they also require employers to have a strong financial foundation and manage the risks associated with health insurance.
Health Reimbursement Arrangements (HRAs): HRAs are accounts established by employers to reimburse employees for qualified medical expenses. HRAs can be funded on a pre-tax basis, which can reduce employees’ taxable income, but they do not provide the same level of comprehensive coverage as traditional health insurance plans.

Employer Financial Assistance for Health Insurance

In addition to providing health insurance coverage, employers in Washington State may also provide financial assistance to their employees to help them pay for the cost of health insurance premiums. This assistance can take various forms, including:

1. Employer Contributions to Health Insurance Premiums

Employers may choose to contribute a portion of the cost of health insurance premiums for their employees. This can help employees reduce their monthly premium payments and make health insurance more affordable.

2. Flexible Spending Accounts (FSAs)

FSAs are employer-sponsored accounts that allow employees to set aside pre-tax dollars to pay for qualified medical expenses. FSAs can be used to cover a wide range of expenses, including health insurance premiums, deductibles, and co-payments.

3. Health Savings Accounts (HSAs)

HSAs are tax-advantaged savings accounts that allow individuals to set aside pre-tax dollars to pay for qualified medical expenses, including health insurance premiums. HSAs offer triple tax benefits: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.

4. Dependent Care Flexible Spending Accounts (DCFSAs)

DCFSAs are employer-sponsored accounts that allow employees to set aside pre-tax dollars to pay for dependent care expenses, such as childcare or eldercare. DCFSAs can be used to cover a portion of the cost of health insurance premiums for dependents.

5. Health Reimbursement Arrangements (HRAs)

As mentioned earlier, HRAs are accounts established by employers to reimburse employees for qualified medical expenses. HRAs can be designed to reimburse employees for the cost of health insurance premiums they pay on their own.

6. Cafeteria Plans

Cafeteria plans, also known as flexible benefit plans, allow employees to choose from a range of benefits, including health insurance, from a pool of employer-funded dollars. Cafeteria plans offer employees more flexibility and choice in how they use their employer’s contributions.

7. Wellness Programs

Wellness programs are employer-sponsored initiatives designed to promote employee health and well-being. These programs can include incentives and rewards for employees who participate in healthy activities, such as gym memberships or health screenings. Wellness programs can help reduce healthcare costs and improve employee morale.

8. Wellness Accounts

Wellness accounts are employer-sponsored accounts that allow employees to set aside pre-tax dollars to pay for wellness expenses, such as gym memberships, fitness classes, and weight loss programs. Wellness accounts can help employees stay healthy and reduce their risk of developing chronic diseases.

9. Incentive Programs

Employers may offer incentives to employees for enrolling in certain health insurance plans or participating in wellness programs. These incentives can take the form of cash bonuses, gift cards, or other rewards.

10. Paid Time Off for Health-Related Activities

Employers may offer paid time off for employees to attend health-related appointments, such as doctor’s visits or wellness checkups. This can help employees prioritize their health and make it easier for them to access healthcare services.

11. Employee Assistance Programs (EAPs)

EAPs are employer-sponsored programs that provide confidential counseling and support services to employees and their families. EAPs can help employees manage stress, cope with personal problems, and access mental health care.

12. Health Insurance Exchanges

Health insurance exchanges, also known as marketplaces, are marketplaces where individuals and small businesses can purchase health insurance plans. Employers in Washington State may partner with health insurance exchanges to offer their employees a range of plan options and premium costs. This can provide employees with more choice and flexibility in selecting health insurance coverage.

Employer Financial Assistance	Description
Employer Contributions to Health Insurance Premiums	Employers contribute a portion of the cost of health insurance premiums for employees.
Flexible Spending Accounts (FSAs)	Employer-sponsored accounts that allow employees to set aside pre-tax dollars for qualified medical expenses, including health insurance premiums.
Health Savings Accounts (HSAs)	Tax-advantaged savings accounts that allow individuals to set aside pre-tax dollars for qualified medical expenses, including health insurance premiums.
Dependent Care Flexible Spending Accounts (DCFSAs)	Employer-sponsored accounts that allow employees to set aside pre-tax dollars for dependent care expenses, including health insurance premiums for dependents.
Health Reimbursement Arrangements (HRAs)	Accounts established by employers to reimburse employees for qualified medical expenses, including health insurance premiums.
Cafeteria Plans	Flexible benefit plans that allow employees to choose from a range of benefits, including health insurance, from a pool of employer-funded dollars.
Wellness Programs	Employer-sponsored initiatives designed to promote employee health and well-being, which can include incentives for employees who enroll in certain health insurance plans.
Wellness Accounts	Employer-sponsored accounts that allow employees to set aside pre-tax dollars for wellness expenses, such as gym memberships or health screenings.
Incentive Programs	Employers offer incentives to employees for enrolling in certain health insurance plans or participating in wellness programs.
Paid Time Off for Health-Related Activities	Employers offer paid time off for employees to attend health-related appointments, such as doctor’s visits or wellness checkups.
Employee Assistance Programs (EAPs)	Employer-sponsored programs that provide confidential counseling and support services to employees and their families, which can include assistance with accessing health insurance.
Health Insurance Exchanges	Marketplaces where individuals and small businesses can purchase health insurance plans, which employers may partner with to offer employees a range of plan options and premium costs.

Health Insurance Subsidies for Eligible Employees

Employers in Washington State are not required to provide health insurance to their employees. However, some employers do choose to offer health insurance as a benefit to their employees. If an employer offers health insurance, they must comply with all applicable state and federal laws, including the following requirements:

Subsidizing Health Insurance Costs

Employers may choose to subsidize the cost of health insurance for their employees. If an employer does so, they must do so in a non-discriminatory manner. This means that the employer cannot discriminate against employees based on their age, sex, race, or other protected characteristics.

Offering Flexible Spending Accounts (FSAs)

Employers may also offer flexible spending accounts (FSAs) to their employees. FSAs are tax-advantaged accounts that allow employees to set aside pre-tax dollars to pay for eligible medical expenses. FSAs can be used to pay for a variety of expenses, including health insurance premiums, co-pays, and deductibles.

Offering Health Savings Accounts (HSAs)

Employers may also offer health savings accounts (HSAs) to their employees. HSAs are tax-advantaged accounts that allow employees to set aside pre-tax dollars to pay for qualified medical expenses. HSAs can be used to pay for a variety of expenses, including health insurance premiums, co-pays, and deductibles.

Additional Information

For more information about health insurance subsidies for eligible employees in Washington State, please visit the following website: https://www.insurance.wa.gov/healthcare-coverage.

Table of Health Insurance Subsidies

Subsidy Type	Description
Employer-sponsored health insurance	Health insurance coverage provided by an employer to their employees.
Flexible spending accounts (FSAs)	Tax-advantaged accounts that allow employees to set aside pre-tax dollars to pay for eligible medical expenses.
Health savings accounts (HSAs)	Tax-advantaged accounts that allow employees to set aside pre-tax dollars to pay for qualified medical expenses.

How to Qualify for Health Insurance Subsidies

To qualify for health insurance subsidies, employees must meet certain criteria. These criteria include:

Income: Employees must have an income below a certain level. The income limits vary depending on the type of subsidy.
Employment: Employees must be employed by an employer that offers health insurance coverage.
Residency: Employees must be residents of Washington State.

How to Apply for Health Insurance Subsidies

Employees can apply for health insurance subsidies online or by mail. To apply online, visit the following website: https://www.wahealthplanfinder.org/. To apply by mail, download the application form from the website and mail it to the address provided on the form.

Employee Health Insurance Premiums as Pre-Tax Deductions

In Washington state, employers have the option to offer health insurance premiums as pre-tax deductions to their employees. This means that the premiums are deducted from the employee’s paycheck before taxes are calculated, resulting in a lower taxable income and potentially higher take-home pay for the employee.

Benefits of Pre-Tax Deductions for Employees

Reduced taxable income: By deducting health insurance premiums before taxes, employees can reduce their taxable income, which may result in lower income tax liability.
Increased take-home pay: With reduced taxable income, employees may see an increase in their take-home pay, as less money is withheld for taxes.
Potential savings on Social Security and Medicare taxes: Pre-tax health insurance premiums are also typically exempted from Social Security and Medicare taxes, providing additional savings for employees.

Benefits of Pre-Tax Deductions for Employers

Attractiveness to employees: Offering pre-tax deductions for health insurance premiums can make an employer more attractive to potential employees, who may be drawn to the opportunity for tax savings.
Reduced administrative costs: By deducting premiums pre-tax, employers can reduce the administrative costs associated with payroll processing.
Potential tax benefits: In some cases, employers may be able to claim tax deductions for the amount of health insurance premiums they contribute to employee plans.

Eligibility for Pre-Tax Deductions

To be eligible for pre-tax deductions for health insurance premiums, the following conditions must be met:

The health insurance plan must be a qualified plan under the Internal Revenue Code.
The premiums must be paid by the employee (employer contributions are not eligible for pre-tax deductions).
The deductions must be made on a consistent basis (e.g., monthly or quarterly).
The employee must be covered by the health insurance plan for the entire period for which the premiums are deducted.

Limitations on Pre-Tax Deductions

There are limitations on the amount of health insurance premiums that can be deducted pre-tax each year. For 2023, the annual limit is $3,050 for individual coverage and $6,150 for family coverage.

Reporting of Pre-Tax Deductions

Employers are required to report pre-tax health insurance premium deductions on employees’ W-2 forms. The deductions will be shown in Box 12 under Code DD.

Tax Consequences of Pre-Tax Deductions

Pre-tax deductions for health insurance premiums are not included in an employee’s gross income for tax purposes. However, when the employee receives benefits from the health insurance plan (e.g., medical expenses, prescription drugs), those benefits are considered taxable income.

Employer Plan Document Requirements

Employers who offer pre-tax deductions for health insurance premiums must have a written plan document in place. The plan document must specify the following:

The eligibility requirements for participation in the plan.
The amount of the premium that can be deducted pre-tax.
The frequency of premium deductions.
The method for reporting pre-tax deductions on employees’ W-2 forms.

State Law Considerations

In addition to federal law, Washington state also has laws governing pre-tax deductions for health insurance premiums. These laws generally mirror the federal requirements but may have some differences.

Additional Resources

Employer Reporting Requirements for Health Insurance Coverage

Health Insurance Reporting Requirements

Employers in Washington state are required to report health insurance coverage information to the Washington Health Benefit Exchange (WA Healthplanfinder) on an annual basis.

Who Must Report?

Any employer with at least one employee who works more than 120 hours per calendar year must report.

What Information Must Be Reported?

Employers must report the following information:

Number of employees
Number of employees offered health insurance
Number of employees enrolled in health insurance
Type of health insurance offered
Contribution to health insurance premiums

Reporting Deadlines

Employers must report health insurance coverage information by May 31st of each year.

How to Report

Employers can report health insurance coverage information online through the WA Healthplanfinder website or by mail.

Penalties for Non-Reporting

Employers who fail to report health insurance coverage information may be subject to penalties of up to $500 per month.

Employer Reporting Guide

The Washington State Health Care Authority has published an Employer Reporting Guide that provides detailed instructions on how to report health insurance coverage information.

Frequently Asked Questions

What is the purpose of employer reporting?

Employer reporting helps to ensure that all eligible individuals in Washington state have access to affordable health insurance coverage.

What happens if I don’t report my health insurance coverage information?

You may be subject to penalties of up to $500 per month.

How do I know if my employees are eligible for health insurance?

Employees are eligible for health insurance if they work more than 120 hours per calendar year.

What type of health insurance must I offer my employees?

You must offer your employees health insurance that meets the minimum essential health benefits requirements.

How much must I contribute to my employees’ health insurance premiums?

You are not required to contribute to your employees’ health insurance premiums, but you may choose to do so.

Detailed Information on Contribution to Health Insurance Premiums

Employers are not required to contribute to their employees’ health insurance premiums. However, if an employer chooses to contribute, the contribution must meet the following requirements:

The contribution must be made on a pre-tax basis.
The contribution must be made on a uniform basis for all employees.
The contribution cannot be used to pay for premiums for health insurance coverage that does not meet the minimum essential health benefits requirements.

The following table provides additional information on employer contributions to health insurance premiums:

Contribution Method	Tax Implications	Uniformity Requirement
Pre-tax	Contribution is not included in employee’s taxable income	Contribution must be made on a uniform basis for all employees
Post-tax	Contribution is included in employee’s taxable income	Uniformity requirement does not apply

Employee Notification of Health Insurance Options

Employers are required to provide employees with a written notice about their health insurance options. This notice must be provided within 14 days of the employee’s start date. The notice must include the following information:

A description of the health insurance plans that are available to the employee
The cost of each plan
The coverage provided by each plan
The employee’s eligibility for each plan
The deadline for enrolling in a plan

The employee must be given the opportunity to review the notice and ask any questions they may have. The employer must also provide the employee with a copy of the notice.

17. Employer Requirements for Providing Health Insurance

In Washington State, employers are required to provide health insurance to their employees if they have 50 or more employees. The health insurance must meet the following minimum requirements:

The plan must provide coverage for a broad range of medical services
The plan must have a reasonable deductible and copayments
The plan must be affordable for employees

Employers can choose to provide health insurance through a group plan or an individual plan. If the employer provides health insurance through a group plan, the plan must be offered to all eligible employees. If the employer provides health insurance through an individual plan, the plan must be offered to all eligible employees who do not have other health insurance coverage.

Employers are also required to contribute to the cost of health insurance for their employees. The amount of the contribution is up to the employer, but it must be at least 50% of the total cost of the plan.

Employer Size	Health Insurance Requirement
50 or more employees	Must provide health insurance that meets minimum requirements
20 to 49 employees	May offer health insurance, but it is not required
Less than 20 employees	Not required to provide health insurance

Employers who do not provide health insurance to their employees may be subject to penalties. The penalties can be up to $1,000 per year for each employee who is not offered health insurance.

Enforcement Mechanisms for Health Insurance Mandate

1. Employer Penalties

The Washington state health insurance mandate requires employers with 50 or more full-time equivalent employees (FTEs) to offer qualifying health insurance to their employees. Employers who fail to comply face penalties of up to $1,000 per qualifying FTE, with a maximum of $20,000 per employer.

2. Employee Shared Responsibility Payments

Individuals who do not have qualifying health insurance and cannot claim a hardship exemption must pay shared responsibility payments when filing their taxes. These payments are calculated based on the taxpayer’s income and family size.

3. Reporting Requirements

Employers are required to report their compliance with the mandate to the Washington Health Benefit Exchange (WAHBE). Employers must also provide their employees with a written notice of their health insurance coverage options. Failure to comply with these reporting requirements may result in penalties.

4. Exchange Participation

Employers with 50 or more FTEs who do not offer qualifying health insurance must pay a fee to the Washington Health Benefit Exchange. This fee is calculated based on the employer’s number of FTEs, and is intended to encourage employers to offer health insurance to their employees.

5. Federal Tax Credits

Small businesses with 50 or fewer FTEs may be eligible for federal tax credits to help offset the cost of offering health insurance to their employees. These credits are available through the Affordable Care Act, and are designed to make health insurance more affordable for small businesses.

Enforcement by the Washington Health Benefit Exchange

The Washington Health Benefit Exchange (WAHBE) is responsible for enforcing the health insurance mandate in the state. WAHBE has a number of enforcement mechanisms at its disposal, including:

6. Audits

WAHBE may conduct audits of employers to verify their compliance with the mandate. The audits may include a review of the employer’s health insurance offerings, reporting requirements, and exchange participation.

7. Investigations

WAHBE may investigate complaints or allegations of non-compliance with the mandate. The investigations may include interviews with employees, employers, and other witnesses.

8. Notices of Violation

WAHBE may issue notices of violation to employers who are found to be in violation of the mandate. These notices may specify the violations and require the employer to take corrective action within a specified period.

9. Penalties

WAHBE may impose penalties on employers who fail to comply with the mandate. The penalties may include fines, fees, and surcharges. The penalties are assessed on a per-employee basis, and can be substantial for employers with a large workforce.

10. Suspension or Revocation of Exchange Participation

In extreme cases, WAHBE may suspend or revoke an employer’s participation in the Washington Health Benefit Exchange. This penalty may be imposed if the employer has repeatedly violated the mandate or refused to take corrective action.

11. Legal Action

WAHBE may refer cases of willful non-compliance with the mandate to the Washington Attorney General for legal action. The Attorney General may bring a lawsuit against the employer to enforce the mandate and seek civil penalties.

12. Employee Complaints

Employees who believe that their employer is not complying with the mandate may file a complaint with WAHBE. The complaint should include details about the alleged violation and any supporting documentation.

13. Whistleblower Protections

Employees who report violations of the mandate are protected from retaliation by their employer. The Washington Law Against Discrimination (WLAD) prohibits employers from retaliating against employees who file a complaint or participate in an investigation related to the mandate.

14. Public Disclosure

WAHBE may publicly disclose the names of employers who have been found to be in violation of the mandate. The disclosure may include the amount of penalties assessed and the nature of the violations.

15. Collection of Penalties

WAHBE has the authority to collect penalties from employers who fail to comply with the mandate. The penalties may be collected through a variety of methods, including administrative offsets, garnishment of wages, and liens on property.

16. Exemption Process

Employers who cannot comply with the mandate may apply for an exemption from WAHBE. The exemption process requires the employer to demonstrate that they have made reasonable efforts to comply with the mandate, but have been unable to do so due to circumstances beyond their control.

17. Hardship Exemptions

Individuals who cannot afford health insurance may apply for a hardship exemption from the shared responsibility payment. The exemption process requires the individual to demonstrate that they meet certain criteria, such as having low income or being unable to work due to a disability.

18. Employer Reporting Requirements

Employers are required to report their health insurance offerings to WAHBE on an annual basis. The reporting must include information about the employer’s health insurance plans, the number of employees enrolled in each plan, and the amount of premiums paid. The reporting is used to monitor compliance with the mandate and to assess the affordability of health insurance for employers and employees.

19. Federal Reporting Requirements

Employers who are subject to the federal Affordable Care Act (ACA) are required to report information about their health insurance offerings to the Internal Revenue Service (IRS). The reporting includes information about the employer’s size, the number of employees offered health insurance, and the amount of premiums paid. The reporting is used to enforce the ACA’s employer mandate and to assess the affordability of health insurance for employers and employees.

20. Tax Implications

Employers who fail to comply with the health insurance mandate may face tax penalties. The penalties are assessed by the IRS and are based on the number of full-time equivalent employees (FTEs) who are not offered qualifying health insurance. The penalties can be substantial for employers with a large workforce.

Penalty	Number of FTEs
$2,000 per FTE	50 or more FTEs
$3,000 per FTE	More than 100 FTEs

Penalties for Employees Who Fail to Obtain Insurance

Individual Mandate Repealed

In 2017, Congress repealed the individual mandate, a provision of the Affordable Care Act that required most Americans to have health insurance or pay a penalty. This means that employers can no longer face penalties for failing to offer health insurance to their employees.

Employer Penalties for Failing to Offer Affordable Coverage

Under the ACA, employers with 50 or more full-time equivalent employees were required to offer affordable health insurance to their employees or face penalties. These penalties were phased in over a period of years and reached their maximum in 2018.

Year	Penalty per month	Threshold Number of Employees
2015	$2,000	100
2016	$3,000	50
2017	$3,150	50
2018	$4,000	50

The penalties were calculated based on the number of employees who were not offered affordable coverage. The penalty was $2,000 per employee in 2015, $3,000 per employee in 2016, $3,150 per employee in 2017, and $4,000 per employee in 2018.

Employer Penalties for Failing to Offer Minimum Essential Coverage

In addition to the penalties for failing to offer affordable coverage, employers with 50 or more full-time equivalent employees were also required to offer minimum essential coverage to their employees. Minimum essential coverage is coverage that meets certain minimum standards, such as providing coverage for essential health benefits and offering preventive services without cost-sharing.

The penalties for failing to offer minimum essential coverage were the same as the penalties for failing to offer affordable coverage.

Employer Penalties for Filing Incorrect Information

Employers were also required to file information with the IRS about their health insurance offerings. If an employer filed incorrect information, they could be subject to a penalty of up to $250 per employee.

Repeal of Employer Mandate

In 2017, Congress also repealed the employer mandate, which required employers with 50 or more full-time equivalent employees to offer health insurance to their employees. This means that employers are no longer required to offer health insurance to their employees, and they will not face any penalties if they do not.

Impact of the Repeal of the Employer Mandate

The repeal of the employer mandate is expected to have a number of effects on the health insurance market.

Increase in the number of uninsured Americans: According to the Congressional Budget Office, the repeal of the employer mandate is expected to result in an increase of 13 million uninsured Americans by 2027.
Increase in health insurance premiums: The repeal of the employer mandate is expected to lead to an increase in health insurance premiums. This is because insurers will no longer be required to offer coverage to people with pre-existing conditions, and they will be able to charge higher premiums to people who are sick.
Destabilization of the health insurance market: The repeal of the employer mandate could destabilize the health insurance market. This is because insurers may no longer be able to count on a steady stream of healthy enrollees from employers.
Loss of coverage for people with pre-existing conditions: The repeal of the employer mandate could lead to people with pre-existing conditions losing their health insurance coverage. This is because insurers will no longer be required to offer coverage to people with pre-existing conditions.

Employer Health Insurance and Payroll Processing

Washington State has specific laws and regulations regarding employer health insurance and payroll processing. Employers must be aware of these requirements to ensure compliance and avoid penalties.

Health Insurance Coverage

Employer Mandate

Employers with 50 or more full-time equivalent employees (FTEs) must offer health insurance coverage to all eligible employees.

Eligible Employees

Full-time employees who work at least 30 hours per week are eligible for health insurance coverage. Part-time employees who work less than 30 hours per week are not eligible unless the employer chooses to cover them.

Employer Contributions

Employers must contribute at least 50% of the cost of health insurance premiums for their employees.

Employer Coverage Options

Employers can offer health insurance coverage through a variety of options, including:

* Group health insurance plans
* Health Reimbursement Arrangements (HRAs)
* Health Savings Accounts (HSAs)

Payroll Processing

Wage and Hour Laws

Employers must comply with Washington State’s wage and hour laws, which include minimum wage requirements, overtime pay, and meal and rest breaks.

Payroll Taxes

Employers must withhold payroll taxes from employee wages, including:

* Federal income tax
* State income tax
* Social Security tax
* Medicare tax
* Unemployment insurance tax

Wage Statements

Employers must provide employees with wage statements each pay period. Wage statements must include information such as:

* Gross wages
* Net wages
* Hours worked
* Deductions
* Taxes withheld

Reporting and Filing

Employers must report and file payroll information with the following entities:

* Internal Revenue Service (IRS)
* Washington State Department of Revenue
* Washington State Employment Security Department

Electronic Payroll

Employers are required to use electronic payroll systems for employees who have direct deposit or automatic withdrawal of funds from their bank accounts.

Employee Rights

Employees have the right to review their payroll records and request corrections if there are any errors.

Health Insurance Marketplace

Washington State has a Health Insurance Marketplace, also known as Washington Healthplanfinder, where eligible individuals and families can purchase health insurance coverage.

Marketplace Coverage Options

The Marketplace offers a variety of health insurance plans, including:

* Bronze plans: Low premiums, high deductibles
* Silver plans: Moderate premiums, moderate deductibles
* Gold plans: High premiums, low deductibles
* Platinum plans: Highest premiums, lowest deductibles

Marketplace Subsidies

Eligible individuals and families may qualify for subsidies to help pay for Marketplace coverage.

Insurance Carriers in Washington State

The following are some of the major health insurance carriers that operate in Washington State:

Carrier	Website
Blue Cross Blue Shield of Washington	https://www.bcbswa.com
Kaiser Permanente	https://healthy.kaiserpermanente.org/washington
UnitedHealthcare	https://www.uhc.com/washington
Providence Health & Services	https://www.providence.org/locations/washington
MultiCare Health System	https://multicare.org

Can Employers Require Employees Have Health Insurance in Washington State?

In Washington state, employers are generally not required to provide health insurance to their employees. However, there are some exceptions to this rule. For example, employers with 50 or more employees are required to offer health insurance to their employees if they are part of a group plan. Additionally, employers with 25 or more employees are required to offer health insurance to their employees if they are part of a self-insured plan.

There are also a number of exemptions to the requirement that employers offer health insurance. For example, employers are not required to offer health insurance to employees who are covered by other health insurance plans, such as Medicare or Medicaid. Additionally, employers are not required to offer health insurance to employees who are working less than 30 hours per week.

If an employer is required to offer health insurance to their employees, they must do so in a fair and equitable manner. This means that the employer must offer the same health insurance plan to all employees who are similarly situated. Additionally, the employer must not discriminate against employees who choose to participate in the health insurance plan.