As a business owner, you’ve done the work to offer health benefits, but not everyone signs up. It’s understandable to feel frustrated. You want to support your employees while maintaining compliance, yet participation is lower than expected.
This article from PAX Financial Group explains why this happens, what Texas law requires, and how you can encourage higher enrollment while keeping your plan affordable and compliant.
Why Employees Decline Coverage
Low participation doesn’t necessarily mean employees don’t value what you offer. It often comes down to personal circumstances, misunderstanding, or cost perception.
They’re on a Spouse’s Plan
Many employees already have coverage through a spouse’s employer. If that plan offers better benefits or lower out-of-pocket costs, they’ll likely stick with it. In these cases, you can document the waiver as “other group coverage,” which keeps you in compliance for participation calculations.
They Misunderstand the Value
Health insurance can feel abstract until someone faces an emergency or a large medical bill. Employees may compare the premium deduction on their paychecks without fully understanding what they get in return, such as preventive care, mental-health visits, or employer contributions to premiums. A lack of clarity during open enrollment can lead to lower sign-ups.
The Premium Share Feels High
For some workers, even a modest premium can feel expensive compared to their take-home pay. Texas small employers typically cover at least half of the employee-only premium. However, if the employee share still feels steep, participation can drop quickly.
In tight labor markets like San Antonio, affordability and communication go hand in hand. When employees understand the real cost of care without insurance, they tend to see the value in joining your plan.
How Texas Handles Participation Rules
If you’re dealing with employees not enrolling in health insurance in Texas, it’s important to understand how participation requirements work under state rules.
Most insurance carriers require that a certain percentage of eligible employees enroll in your plan before issuing or renewing group coverage. The minimum participation for a small group plan in TX is generally about 60% of eligible employees.
This rule exists because insurance relies on risk sharing. If too few employees participate, the insurer assumes the group is made up of higher-risk individuals and may decline or terminate coverage outside specific enrollment periods.
What Happens If You Fall Short
If participation drops below the required threshold, you may face:
- Plan termination: The carrier could cancel your policy midyear.
- Higher renewal rates: Some insurers re-underwrite groups with low participation, leading to higher premiums.
- Limited renewal options: Falling below 60% may restrict your ability to switch carriers mid-cycle.
Temporary Exceptions
During the annual open enrollment window, carriers in Texas are required to accept and renew small-group plans, a process known as guaranteed issue, even if participation temporarily falls below the carrier’s required percentage. This allows employers time to improve enrollment before the plan is re-underwritten or renewed, helping maintain access to group coverage despite short-term declines in participation.
It’s also worth noting that employees covered under a spouse’s plan, Medicare, TRICARE, or VA benefits are generally counted as valid waivers, meaning they don’t negatively affect your participation ratio.
Understanding these Bexar County employee coverage rules helps you maintain eligibility and keep your plan active even when participation fluctuates.
Strategies To Boost Enrollment
If participation is lagging, it may not be the plan itself. It’s often how the benefit is presented or supported. Small, targeted changes can make a big difference.
Offer Contribution Incentives
Consider tiered contributions that reward tenure or position. Covering 75–100% of employee-only premiums for key staff while contributing 50% for newer hires can motivate enrollment while keeping costs balanced.
You could also provide employer-paid base coverage, where the business funds a lower-tier plan and gives employees the option to “buy up” to richer coverage. This structure keeps everyone insured while maintaining flexibility.
Conduct Benefit Education Sessions
Employee education is one of the most effective ways to increase participation. Many workers decline coverage simply because they don’t understand how it works. Holding a short meeting (virtual or in person) can clear up confusion and show the real value of your contribution.
Include examples of what typical medical services cost without insurance, explain preventive-care benefits, and demonstrate how premiums, deductibles, and out-of-pocket costs interact.
Consider bringing in experienced financial professionals, such as those at PAX Financial, to walk through the numbers in plain language.
Highlight Total Compensation Value
Health benefits are part of a broader compensation package, not just an added expense. Use your internal communications to illustrate the total value employees receive: salary, retirement contributions, insurance premiums, paid time off, and other perks.
A well-crafted breakdown shows how much the company invests in each team member beyond their paycheck. When employees see the bigger picture, participation rates often improve dramatically.
The PAX Education Advantage
At PAX Financial Group, we understand the challenges you face as a business owner when building and managing benefits. Our team of advisors is here to help make the process easier and more effective.
Ongoing Communication — Not Just at Renewal
We believe education shouldn’t stop after open enrollment. PAX works with you to create ongoing communication programs that keep employees informed and engaged. That includes:
- Plain-English breakdowns of plan options and annual changes.
- ROI tracking to demonstrate how participation supports retention and productivity.
By addressing employee confusion early and showing the true value of your benefits, you strengthen trust and participation throughout the year.
HR Tools and Administrative Support
PAX also offers HR toolkits to simplify onboarding and benefits administration. These resources make it easier to track enrollment, document waivers, and maintain compliance with Texas Department of Insurance guidelines.
Whether you’re managing a few employees or dozens, the right tools save time, reduce paperwork, and prevent errors that could affect eligibility.
If your plan participation is lower than expected, don’t panic! Reframe, re-educate, and re-align.
Talk with PAX Financial Group about strengthening communication, improving participation, and keeping your business compliant and competitive in San Antonio’s small-group market.
