Who Really Belongs in Your Group Health Plan?

On Oct 20, 2025

By Charles A. Bruder, Esq., Norris McLaughlin, P.A.

Employers often call with some variation of this question: “Do I have to include [employee name] in my group health plan?” Or, “can I exclude this group of employees?”

The answer, of course, is everyone’s favorite: It depends.

Your first stop is always your group health plan document, specifically the adoption agreement. Look for the section titled “Eligibility” (or something similar). Most health insurance policies cover lots of employees, so plans are written to be inclusive. If the employee is in a covered category, you probably need to offer them coverage.

Eligibility also depends on employment status. Are they full-time? Part-time? Contract? (Are they even employees? That’s another conversation). Group health plans often require 30 hours worked a week (on average), so going from full-time to part-time can change eligibility. But don’t rush to drop that employee from coverage as soon as that shift happens – federal COBRA rules may allow for a limited coverage continuation period, at the employee’s expense, after losing eligibility.

Not subject to federal COBRA (because you average less than 20 employees)? Many states like New Jersey and Pennsylvania have rules (a/k/a “mini-COBRA”) that apply to smaller employers. The New Jersey Continuation Coverage rules, for example, allow small business employees to elect continued coverage after becoming ineligible. Like COBRA, employees have a limited time to elect coverage continuation.

The risk to employers in getting this wrong is steep. Excluding an eligible employee can result in retroactive coverage, claims costs and penalties. As such, employers should always assume eligibility and review the plan before making changes. Or consult an employee benefits attorney to ensure compliance with state and federal laws.

This may not be the neat, one-sentence answer HR managers often hope for, but in the world of ERISA and employee benefits, certainty beats shortcuts every time.

Disclaimer: Sponsored content articles do not reflect the opinions of New Jersey Business Magazine or the New Jersey Business & Industry Association.

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