Health Insurance for Remote Workers Across Multiple States: Network Access, Regulatory Conflicts, and What Employers Are Missing
An employee hired in Ohio who relocates to New Mexico while staying on the company’s Ohio-issued group plan is still covered. What that coverage means in practice can look very different from what the benefits summary describes. Which providers are in-network? Which state’s rules apply? What happens when the employee needs a specialist 1,500 miles from headquarters? Remote work created this mismatch at scale, faster than most employer plans were built to handle it.
Which State’s Rules Apply to a Fully Insured Plan
Fully insured group health plans are regulated mainly by the state where the policy is issued, called the situs state. A plan issued in Texas follows Texas benefit mandates. A plan issued in California follows California’s, which include broader mental health coverage rules and a fertility coverage mandate. These are legally different products, even when the same carrier sells them under the same brand.
What happens when an employee lives somewhere else depends on the employee’s home state. States fall into roughly three groups:
States that apply their laws to residents. Texas applies its insurance law to Texas residents covered under group policies issued outside the state.
States that defer to the situs state. Michigan exempts group policies lawfully issued to an out-of-state employer for employees who live in Michigan. New York generally takes the same approach for traditional employer groups.
States where it depends. California doesn’t apply its insurance code to out-of-state plans as long as the employer’s principal place of business and most of its employees are outside California.
So a remote employee living in California on a Texas-issued plan generally doesn’t gain California’s mandated benefits. They have a Texas plan that follows them. A remote employee living in Texas on an Ohio-issued plan may be in a different position, because Texas reaches out-of-state policies.
When an employee asks about a benefit their home state requires, the employer should start with the plan documents, the insurer, and benefits counsel. Whether the home state’s insurance regulator can step in varies. Maryland, for example, generally limits its reach over out-of-state policies to unfair trade practice complaints.
The Network Problem in Practice
For most remote workers, in-network access matters more day to day than mandates. A plan built around a regional network in Minneapolis may have dense coverage in Minnesota and very little in Phoenix. Employees who live far from the employer’s offices may lose in-network access and pay more out of network. Restrictive plans may also limit out-of-network coverage.
Plan type matters a lot here. An HMO generally won’t cover out-of-network care except in an emergency, and it may require members to live or work in its service area to be eligible. An EPO covers only in-network care except in emergencies. A PPO still covers out-of-network care, at a higher cost.
The gap shows up in survey data. In a 2025 survey of 600 remote workers living outside their employer’s state, conducted by network rental company MagnaCare, six in 10 millennial and Gen Z employees said they rely on out-of-network care because of where they live.
Before accepting a remote position, search the carrier’s provider directory using your own ZIP code. Check primary care, any specialists you see regularly, and the major hospitals near you. The results can tell a different story than the plan’s marketing materials.
Some carriers offer national access programs that help. Blue Cross Blue Shield’s BlueCard program, for example, lets members of one Blue plan use contracted providers in other Blue plans’ areas. It also charges them the local plan’s negotiated rates.
Self-Funded Plans and ERISA Preemption
Self-funded employer plans work differently. ERISA generally preempts state laws that would regulate how these plans operate, so state benefit mandates don’t apply to people covered by them. That’s why many multi-state employers prefer self-funding. One benefit design applies everywhere, without tracking 50 sets of state mandates. Self-funded plans also fall outside the extraterritoriality question entirely.
Self-funded plans still have to follow federal rules. One example is the requirement that a plan covering mastectomies also cover breast reconstruction. The trade-off is that employees in states with strong consumer protections don’t get those state protections under a self-funded plan, no matter where they live.
What Employers Should Do Before the Next Renewal
Any employer with remote employees clustered outside its home market should map where those employees live. Then check network coverage in each of those areas. Confirm that primary care, major hospital systems, and commonly used specialties are in-network in each market. That’s a renewal-season task, not something to sort out after a claim is denied.
If the audit finds gaps, there are four common fixes:
Move to a carrier with a national network. A PPO with broad national access, or a carrier program like BlueCard, can close most gaps without changing the plan’s funding.
Add a secondary or rented network. Network rental lets a plan contract for in-network access in specific markets where its primary network is thin.
Self-fund with a national network. A self-funded plan run by a third-party administrator with broad national network agreements gives one consistent design across states.
Offer an individual coverage HRA (ICHRA). Employees buy individual coverage where they live, so the network is always local. Employers can set different allowances by class, including by rating area or state. The minimum class size rule doesn’t apply when the class is defined as a whole state or group of states.
None of these is free. Weigh the cost against what network gaps already cost: out-of-network claims, appeals, and the employee relations problems that follow.
Sources
Mercer (Marsh). “Beyond state lines: A primer on insurance law extraterritoriality.” March 26, 2025. https://www.mercer.com/en-us/insights/us-health-news/beyond-state-lines-a-primer-on-insurance-law-extraterritoriality/
New York Department of Financial Services. “OGC Opinion No. 03-10-23: Group Health Insurance, Mandated Benefits.” October 29, 2003. https://www.dfs.ny.gov/insurance/ogco2003/rg031023.htm
SHRM. “Rethinking Employee Benefits for Permanently Remote Workers.” May 5, 2021. https://www.shrm.org/topics-tools/news/benefits-compensation/rethinking-employee-benefits-permanently-remote-workers
HealthCare.gov. “Health insurance plan & network types: HMOs, PPOs, and more.” https://www.healthcare.gov/choose-a-plan/plan-types/
BenefitsPRO. “8 in 10 young remote workers weighing job change due to health plan issues.” May 19, 2025. https://www.benefitspro.com/2025/05/19/8-in-10-young-remote-workers-weighing-job-change-due-to-health-plan-issues/
Blue Cross and Blue Shield of Kansas. “Nationwide access, local support.” November 2, 2023. https://blog.bcbsks.com/2023/11/02/nationwide-access-local-support/
Connecticut Office of the Healthcare Advocate. “Self vs. Fully Funded.” https://portal.ct.gov/oha/odco/for-employers/self-vs-fully-funded
Dickinson Wright. “New HRA Alternatives for Employers.” August 1, 2019. https://media.dwlaw.com/wp-content/uploads/2026/07/03153719/new-hra-alternatives-for-employers-1.pdf
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