Answers · Eligibility & rules
What are the minimum participation requirements for group health insurance?
Most small group carriers require 70% of eligible employees to enrol, excluding anyone with other qualifying coverage, and many also require the employer to contribute at least 50% of the employee-only premium.
The exact threshold is set by the carrier rather than by federal law, and 70% of eligible employees is the common figure. Employees who waive because they have other qualifying coverage, such as a spouse's plan, Medicare, Medicaid or TRICARE, are normally removed from the calculation before the percentage is applied, which is why a group that looks short can still qualify once waivers are counted properly.
Participation failure is one of the most common reasons a small employer loses its group plan. If enough employees decline, the carrier can decline to renew, usually leaving the company to look for coverage during the annual open enrolment window when participation rules are relaxed.
An Individual Coverage HRA has no participation requirement of this kind. You set an allowance, employees buy their own ACA marketplace plan, and an employee who declines does not put anyone else's coverage at risk. That is a structural difference rather than a pricing one, and it is often what brings an employer to the conversation in the first place.
Last reviewed 2026-08-21. Premium figures are plan year 2026 on both sides of every comparison, from the CMS Marketplace Public Use Files (individual market) and Ideon (small group). Employer counts from BLS QCEW 2024 Q2. All savings figures are ranges and estimates, not quotes or guarantees.
Related questions
Do employees with other coverage count against our participation percentage?
Usually not. Employees who waive because they have other qualifying coverage, such as a spouse's plan, Medicare, Medicaid or TRICARE, are normally removed from the eligible count before the percentage is calculated.
What happens if we fail the participation requirement?
The carrier can decline to renew. In practice that leaves the company shopping during the annual open enrolment window, when participation rules are relaxed, or looking at an arrangement that has no participation floor.
Does an ICHRA have a participation requirement?
No. You set an allowance and employees buy their own individual coverage. An employee who declines does not put anyone else's coverage at risk, which is why failing participation is a common reason employers start looking.