Benefits for NEMT drivers: health coverage, paid leave, and retirement rules

Required benefits depend on headcount and state

Driver benefits split into two groups: the ones the law requires once you reach a certain size or operate in a certain state, and the ones you choose to offer to keep good drivers. The required list is shorter than many owners expect, and it changes as a fleet grows.

Three points before the details. Benefit laws cover employees, so the answer depends on how drivers are classified; the guide to 1099 and W-2 drivers covers that choice. Workers’ compensation is insurance the employer buys, not a benefit drivers enroll in, and its state thresholds are in the workers’ comp guide. And benefits are part of labor cost, so price them in before quoting a contract. The driver cost calculator adds them to wages and payroll taxes.

Health coverage and the 50-employee line

The Affordable Care Act’s employer shared responsibility rules apply only to an applicable large employer, or ALE. You are an ALE for a calendar year if you averaged at least 50 full-time employees, including full-time equivalents, during the year before. Companies treated as one employer under the IRS aggregation rules, such as some commonly owned companies, are counted together.

The IRS counting rules:

• Full-time employee: at least 30 hours of service a week on average in a month, or at least 130 hours of service in the month.
• Hour of service: every hour the employee is paid or entitled to be paid for work, plus paid vacation, holiday, sick, and other leave hours. Paid waiting time between trips counts.
• Full-time equivalents: add the month’s hours for everyone who is not full-time, capping each person at 120, then divide by 120.

An example, for illustration: a fleet with 38 full-time drivers and staff, plus 30 part-time drivers averaging 80 hours a month, has 30 × 80 = 2,400 part-time hours. Divided by 120, that is 20 full-time equivalents, for a total of 58. If the year’s monthly totals average 50 or more, the company is an ALE for the following year. The full-time equivalents count only toward the size test. An ALE does not have to offer coverage to part-time employees to avoid a payment.

What happens once you cross the line

An ALE can owe a payment in two ways, and only if at least one full-time employee buys Marketplace coverage with a premium tax credit:

Both amounts rise with inflation every year. For 2026 they are $3,340 and $5,010 (Rev. Proc. 2025-26). Coverage counts as affordable when the employee’s share for self-only coverage does not exceed a set percentage of household income, which is 9.96 percent for plan years beginning in 2026 (Rev. Proc. 2025-25).

For NEMT, the hard part is part-time drivers drifting into full-time status. A driver scheduled for 25 hours who keeps picking up late will-calls can cross 130 hours in a month. Watch actual hours, not scheduled ones.

Under 25 employees: the health care tax credit

Small fleets that choose to offer coverage may qualify for the small business health care tax credit. The IRS lists these conditions:

• a staff under 25 full-time equivalents;
• average yearly pay per full-time equivalent under an inflation-adjusted limit, which is $67,000 for tax year 2025 (Form 8941 instructions);
• coverage bought through a SHOP Marketplace, with limited exceptions;
• the employer pays at least 50 percent of the cost of employee-only coverage.

The credit can reach 50 percent of premiums paid, is available for two consecutive tax years, and shrinks as headcount and average wages rise. It is smaller for employers above 10 full-time equivalents or above an average wage of $33,000 for tax year 2025.

Paid sick leave

Paid sick leave for NEMT drivers comes mostly from state and local law, and the rules vary in accrual rate, annual cap, and which employers are covered. Four examples from the states’ own labor agencies and statutes:

Sick leave laws also add record-keeping. Minnesota, for example, requires employers to show each employee’s available and used hours every pay period, which depends on clean timecards. The guide to driver timekeeping covers the records.

Federal contracts

Executive Order 13706 adds a federal layer for companies with covered federal service contracts. Employees earn a minimum of one paid sick hour for each 30 hours they work on or in connection with the contract, and the contractor may limit accrual to 56 hours a year (29 CFR 13.5). The requirement arrives through the contract clause FAR 52.222-62, so read any federal ride contract for it before you price the work. The guide to VA transportation contracts covers federal ride work.

Family and medical leave

The Family and Medical Leave Act gives eligible employees up to 12 workweeks of unpaid, job-protected leave in a 12-month period for reasons such as a new child or a serious health condition (29 CFR 825.200). It applies to employers with 50 or more employees on each working day in 20 or more calendar workweeks of the current or prior year (825.104).

A driver is eligible after 12 months of employment and 1,250 hours of service in the past 12 months, at a worksite where the employer has 50 or more employees within 75 miles (825.110). A fleet with 50 drivers spread across distant yards can be a covered employer while some of its drivers are not yet eligible. Some states add family leave laws of their own; check your state labor agency.

Retirement: state auto-IRA mandates and the federal credit

Some states require employers without a retirement plan to sign up for a state-run savings program, in which employees save through payroll deduction into their own IRA. Three examples:

The employer’s job in these programs is small: register, send payroll deductions each pay period, and keep the employee list current. CalSavers says employers pay no fees, make no contributions, and take on no fiduciary duty, and OregonSaves makes the same fee and fiduciary points. Illinois does not allow an employer match through its program.

Starting your own plan instead

The mandates apply to employers without their own workplace plan, so starting one, such as a SIMPLE IRA or a 401(k), is the other way to comply, and a federal tax credit offsets much of the setup cost. Under the IRS startup cost credit (Form 8881), an employer with 100 or fewer employees who earned at least $5,000 can claim the credit for three years:

• 50 or fewer such employees: 100 percent of eligible startup costs;
• 51 to 100 such employees: 50 percent of eligible startup costs;
• the yearly cap is the greater of $500 or the lesser of $250 per eligible non-highly compensated employee and $5,000.

Eligible costs include setting up and running the plan and educating employees about it. The plan needs at least one non-highly compensated participant, and the credit is not available if the same employees were recently covered by another plan of yours.

Low-cost extras drivers notice

Required benefits keep you legal. Small, practical extras are often what drivers compare between employers. Options that cost little and fit NEMT work:

• Predictable weekly schedules. Set shifts on a repeating pattern so drivers can plan childcare and second jobs. The retention guide covers why schedule stability matters.
• Pay that is easy to check. Give each driver a statement showing the hours and trips behind every paycheck, so questions get settled before they turn into resignations.
• Paid training and safety meetings. Pay for CPR, securement, and defensive driving time instead of asking drivers to do it on their own time.
• Covered license and certification costs. Pay for any chauffeur class, endorsement, or CPR card the job requires.
• A phone plan or stipend for drivers who use their own phones for the driver app; see the guide to company phones for NEMT drivers.
• Bonuses for safe, on-time work, structured so they do not reward speed; see driver bonus programs.
• Extra paid time off beyond the state minimum, even one or two days.

Write each benefit into a policy with its eligibility rules, and apply it the same way to every driver in the same role. A benefit promised in writing becomes an obligation, so start with what you can sustain.

Keeping hours straight in HealthRide

Every clock-in and clock-out a driver makes in the HealthRide driver app becomes part of that driver’s timecard. The driver and timecard reports export hours by driver for any week, which gives you actual hours to check who is averaging 30 a week and how many hours each driver has worked toward sick leave.