Oregon Employer Health Insurance Requirements and Penalties

Oregon employer health insurance requirements come almost entirely from federal law: if you averaged 50 or more full-time equivalent employees last year, you must offer affordable coverage that meets minimum value standards or face per-employee tax penalties. Oregon itself does not require any employer to offer health insurance. What the state does require is that fully insured plans sold here include specific benefits, that every employer handle Paid Leave payroll contributions, and that employers too small for federal COBRA offer a shorter state continuation option when workers leave.

Who Has to Offer Health Insurance

The federal employer mandate under 26 U.S.C. § 4980H applies to any business classified as an Applicable Large Employer, meaning it averaged at least 50 full-time employees during the prior calendar year.¹ A full-time employee is anyone averaging at least 30 hours per week or 130 hours in a calendar month. Part-time workers count too, through a full-time equivalent calculation that converts their monthly hours into whole-employee units.²

Oregon has no parallel state mandate. Employers below 50 FTEs can decide whether to offer coverage at all. Those that choose to offer it, and buy a fully insured plan from an Oregon carrier, pick up the state benefit mandates discussed further down.

What “Offering Coverage” Actually Requires

Simply having a plan is not enough. To avoid penalties, the coverage must clear two tests.

Affordability. For the 2026 plan year, an employee’s required contribution for self-only coverage cannot exceed 9.96% of household income. Because employers rarely know household income, the IRS allows three safe harbors: the employee’s W-2 wages, their hourly rate of pay, or the federal poverty line. Under the federal poverty line safe harbor for 2026, the employee’s monthly share for self-only coverage must stay at or below roughly $132 per month for workers in the continental United States.

Minimum value. The plan must cover at least 60% of the total expected cost of covered benefits.³ Most standard group plans clear this easily; thin high-deductible designs sometimes do not. The IRS publishes a minimum value calculator for checking.

2026 Penalties for Noncompliance

Applicable Large Employers face two separate penalties, both adjusted each year under a premium-growth formula.

Section 4980H(a) penalty. If you do not offer coverage to at least 95% of your full-time employees and at least one worker receives a subsidized marketplace plan, the 2026 penalty is $3,340 per full-time employee. The first 30 employees are subtracted before the calculation, so a 60-employee company would owe $3,340 × 30 = $100,200.⁴
Section 4980H(b) penalty. If you offer coverage but it fails the affordability or minimum value test, the 2026 penalty is $5,010 for each full-time employee who actually enrolls in a subsidized marketplace plan. There is no 30-employee reduction, but the total is capped at what the 4980H(a) penalty would have been.⁴

Penalties are assessed monthly at one-twelfth of the annual amount, so closing a coverage gap mid-year limits your exposure. The IRS issues a Letter 226-J proposing any assessment before collecting, allowing you to respond with corrected enrollment and offer data.

Oregon Benefit Mandates on Fully Insured Plans

Oregon layers benefit requirements on top of the federal baseline through ORS Chapter 743A and related statutes.⁵ These apply to fully insured plans issued, renewed, or modified in the state. If you buy group coverage from an Oregon carrier, the plan already incorporates them.

One boundary matters first: if your company self-insures its health plan instead of buying a fully insured policy, the Oregon-specific mandates generally do not apply. ERISA Section 514 preempts state insurance regulation of self-insured employer plans, and Oregon’s Division of Financial Regulation has confirmed this with respect to the Reproductive Health Equity Act, noting that self-insured employer plans and Medicare plans are not subject to its requirements.⁶ Self-insured plans still owe federal obligations: ACA essential health benefits where applicable, mental health parity under federal law, and preventive care coverage.

Reproductive Health Equity Act

Effective for plans issued or renewed after January 1, 2019, the Reproductive Health Equity Act requires covered plans to provide a broad set of reproductive health services with zero cost-sharing: no deductibles, copays, or coinsurance.⁷ Covered services include cervical cancer screening, clinical breast exams, FDA-approved contraceptives, voluntary sterilization, pregnancy termination, STI and HIV screening, and additional services the Oregon Health Authority designates by rule.⁶

Telehealth Parity

Under ORS 743A.058, a plan must cover a service delivered via telemedicine if the plan already covers the same service in person, it is medically necessary, and it can be safely delivered through telehealth.⁵ The definition is broad, covering video, audio-only phone calls, asynchronous messaging, and remote monitoring data. Cost-sharing and prior authorization cannot be heavier than they would be for the in-person equivalent.

Hearing Aids and Other Mandated Benefits

ORS 743A.141 requires coverage of hearing aids and assistive listening devices for both children and adults under specified clinical conditions.⁵ Oregon also mandates specific diagnostic screenings, including colorectal cancer screening under state-defined clinical guidelines.

Mental Health Parity

Oregon carriers offering plans with behavioral health benefits must ensure nonquantitative treatment limitations on mental health and substance use disorder services are no more restrictive than those on medical and surgical services. Carriers conduct an annual internal analysis and report compliance to the state by March 1 each year. In practice, prior authorization, visit limits, and provider network standards for behavioral health cannot be stricter than their physical-health equivalents.

Paid Family and Medical Leave Contributions

Separate from health insurance, Oregon’s Paid Leave program is a payroll contribution every Oregon employer handles regardless of size. For 2026, the total contribution rate is 1% of each employee’s wages up to $184,500, split between employer and employee shares.⁸

Employers with 25 or more employees pay the employer portion. Employers with fewer than 25 are exempt from the employer share but must still withhold and remit the employee contribution.⁹ All employees can apply for Paid Leave benefits regardless of employer size, and returning workers must get their job back or a comparable position with the same pay and benefits.

State Continuation Coverage for Small Employers

Federal COBRA covers employers with 20 or more employees. Oregon fills the gap below that line. Under ORS 743B.347, employees of businesses with fewer than 20 workers can continue their group coverage for up to nine months after losing a job or having hours reduced.¹⁰

The employee must have had continuous coverage for at least three months before the qualifying event. Qualifying events include voluntary or involuntary job loss, reduced hours, Medicare eligibility, loss of dependent child status, and death of the covered person. Spouses and dependent children are eligible along with the employee.

The employee pays the full premium, typically directly to the employer. To elect continuation, the person must notify the insurer in writing within 10 days of becoming eligible or 10 days after receiving notice, whichever is later.¹⁰ Build the notification into your offboarding process. The clock runs whether or not the departing worker knows the option exists.

Federal Reporting Obligations

Applicable Large Employers file two forms annually with the IRS.

Form 1095-C is an individual statement for each full-time employee showing which months coverage was offered, the type offered, and the employee’s lowest-cost monthly premium for self-only coverage. Part II uses a grid of alphanumeric codes to describe offers and safe harbor methods. Miscoded entries are the most common source of IRS correction notices.¹¹
Form 1094-C is the transmittal summarizing how many 1095-Cs you are filing, your monthly employee counts, and aggregated group status.¹²

Each employee gets a copy of their 1095-C. Paper delivery is the default; electronic delivery is allowed only with the employee’s affirmative consent. For the 2025 tax year filed in early 2026, employee copies are due by early March and electronic IRS filing is due by the end of March. Any employer filing 10 or more information returns in a calendar year must file electronically through the IRS AIR system, a threshold that captures essentially every Applicable Large Employer.¹³

Tax Credit for Small Employers Who Offer Coverage

If you are below the mandate threshold and choose to offer coverage, a federal tax credit can offset up to 50% of your premium contributions (35% for tax-exempt organizations). To qualify, you must have fewer than 25 full-time equivalent employees, pay average annual wages below an inflation-adjusted threshold (most recently published at $62,000), and contribute at least 50% of the premium cost for each enrolled employee.¹⁴ The plan must be purchased through the Small Business Health Options Program (SHOP) marketplace.

The credit scales down as the workforce approaches 25 or average wages rise. Maximum credit goes to employers with 10 or fewer FTEs and average wages at or below $25,000 as adjusted for inflation. It is available for only two consecutive tax years, so timing matters when you plan to start offering coverage.

1
Office of the Law Revision Counsel. 26 U.S. Code 4980H – Shared Responsibility for Employers Regarding Health Coverage
2
Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer
3
Internal Revenue Service. Minimum Value and Affordability
4
Internal Revenue Service. Revenue Procedure 2025-26
5
Oregon State Legislature. Oregon Code 743A – Health Insurance: Reimbursement of Claims
6
Division of Financial Regulation. Oregon’s Reproductive Health Equity Act (RHEA)
7
Oregon State Legislature. HB3391 – Reproductive Health Equity Act
8
Oregon Employment Department. Current Tax and Contribution Rates
9
Paid Leave Oregon. What Employers Need to Do
10
Oregon Division of Financial Regulation. State Continuation
11
Internal Revenue Service. Form 1095-C – Employer-Provided Health Insurance Offer and Coverage
12
Internal Revenue Service. Topic No. 801, Who Must File Information Returns Electronically
13
Internal Revenue Service. E-file Information Returns
14
Internal Revenue Service. Small Business Health Care Tax Credit and the SHOP Marketplace