Do you need an EOR, or just a health plan? A guide for US founders and HR
SafetyWing for Startups (formerly Remote Health) provides health insurance for companies with people in more than one country, through two products: SafetyWing for Startups Global, which covers employees and contractors living outside the US, and SafetyWing for Startups US, a group health plan for US-based employees. This post is for US companies making their first hires abroad, whether the person reading is the founder or the HR and ops lead, who have been told that giving those people health insurance means signing up with an employer of record.
An employer of record (EOR) employs someone on your behalf in a country where you have no company. A health plan insures them. You need an EOR when the person has to be an employee under local law. You don't need one to buy a health plan, and buying a health plan doesn't by itself make anyone an employee. The two decisions are separate, and this post takes them one at a time.
What an employer of record does, and what it costs
An employer of record is a company with a legal entity in the worker's country. It employs the person through that entity while you direct the day-to-day work. The EOR holds the local employment contract and runs payroll, employer taxes, statutory benefits and filings. You pay a platform fee per employee per month on top of the person's salary and the employer-side social contributions in that country, and some providers also hold a deposit of about a month's salary until the person leaves. (The deposit, at least, comes back.) Fees vary by provider and country; the cost table further down gives the market range next to the price of a health plan.
The benefits an EOR provides follow local norms. Someone employed through an EOR in Germany goes into statutory health insurance because the law requires it; someone in a country with no such requirement gets whatever the EOR's local package includes. Coverage is consistent inside a country and different between countries, and members within a distributed team are very likely to compare notes about what each of them have.
When a US company needs an EOR
You need an employer of record when someone abroad has to be an employee and you have no entity in their country. That applies in two situations:
The role is permanent, full-time and under your direction.
Local law treats that kind of role as employment whatever the contract says.
The person needs an employment contract for a visa, mortgage or local pension.
What separates a contractor from an employee varies by country. In several places a long-term, exclusive, full-time contractor is an employee in the eyes of the local authority regardless of the paperwork, and the back taxes and benefits owed can be applied across the whole relationship once that is decided. (Our Future of Work Index outlines the conventions in several countries.)
The law in the worker's country requires that an employee be employed properly, and an EOR is one of three ways to do that, alongside opening your own entity and, in some countries, registering directly as a foreign employer with the local tax and social security authorities. The EOR is the fast route, which is why small US teams use it for their first few hires in a country and open an entity later, once there are several people or customers there.
Does giving a contractor health insurance make them an employee?
On its own, no. Worker classification tests look at the whole relationship: who controls the hours and the work, how long the engagement has lasted, whether the person works for other clients, and whether they carry their own tools and risk. Health insurance is one factor among several.
The IRS lists employee-type benefits such as insurance, pension plans and paid vacation under "type of relationship", alongside the written contract, the permanency of the engagement and whether the work is a key part of the business. According to their website, all the evidence of control and independence has to be weighed together (irs.gov, Type of relationship). The US Department of Labor's wage-and-hour test is also multi-factor, and the department is in the middle of rewriting it: it stopped enforcing its 2024 rule in May 2025 and proposed a replacement in February 2026 (dol.gov, Field Assistance Bulletin 2025-1; Federal Register, 27 February 2026). Tests in other countries weigh the same kinds of evidence, with benefits as one item on a longer list and the weighting set locally.
So the question to ask is about the role. If the person fits that description, convert them through an EOR or your own entity and insure them afterward. If they are a genuine contractor, insuring them is a benefit you give a contractor, and their status stays what it was. (The contract having "independent contractor" in the title doesn't settle it either way; the IRS counts the written contract as one more factor, the same as the benefits.)
When a health plan on its own is enough
A health plan on its own is enough when the people you want to cover are genuine contractors, or employees who already have a legal employer (your own entity or an EOR) and need better or more consistent coverage than their local package gives them. In both cases the company buys the plan directly, and no local entity is needed to do that.
SafetyWing for Startups Global covers employees, contractors and freelancers living in 175+ countries under one plan, bought by the company (safetywing.com/remote-health). A US company can buy it for its people abroad. How it works:
Plans for teams with over 5 people. Group pricing starts at five, though the minimum can vary state to state. Check with SafetyWing if you want to confirm your minimum.
Three plan options. Our plans range from zero-deductible, zero co-insurance to deductibles up to US$5,000. You choose what works best for your team.
One solution for your global and US team. Wherever they’re located in the world, SafetyWing has a plan for them.
The US exception
SafetyWing for Startups doesn't cover contractors who live in the US, and the Global product only covers people living outside the US. SafetyWing for Startups US is a group health plan for full-time W-2 employees of US companies on the Cigna PPO network. Contractors and part-time employees aren't eligible.
For a US-based contractor, there are two main options: a taxable stipend they spend on a marketplace plan of their own, or converting them to a W-2 employee so they can be added to the Startups US plan.
Running a health plan on top of EOR
A common setup for a US company with global employees is to keep the EOR for them, and put everyone outside the US, EOR employees included, on SafetyWing for Startups Global. This way, the health benefit is the same whoever the legal employer is. In countries with compulsory statutory insurance, the EOR's local package already includes it and the global plan can be used as a top-up. In Germany, Switzerland, the Netherlands and Australia, local regulations may restrict members from using the plan as their primary insurance, so it works there as a top-up to statutory coverage.
Genuine contractor outside the US: legal employer, their own business; health coverage, SafetyWing for Startups Global.
Full-time hire in a country where you have no entity: legal employer, EOR, or your own entity later; health coverage, EOR's statutory package, with SafetyWing for Startups Global on top.
Employee of your own foreign entity: legal employer, you; health coverage, SafetyWing for Startups Global, plus whatever local law requires.
Full-time W-2 employee living in the US: legal employer, you; health coverage, SafetyWing for Startups US.
Contractor living in the US: legal employer, their own business; health coverage, not covered by SafetyWing for Startups today.
The monthly cost shape, per person:
EOR: platform fee, typically US$199 to US$650 per employee per month, higher in some countries and for larger contracts (peoplemanagingpeople.com, 2026); what else you pay, salary, employer-side taxes and contributions, a deposit with some providers.
SafetyWing for Startups Global: plan fee, Standard plan shown at US$162 per month on the product page; what else you pay, a small membership fee covering payment card services.
Joey has been driving growth for startups for over 24 years, including leading his own Y Combinator-backed startup to acquisition. He has spent the past nine years as a digital nomad, living in 18 countries and experiencing everything from Día de los Muertos in Guadalajara to an unexpected swim in the Venice canals.
Joey Flores
Joey has been driving growth for startups for over 24 years, including leading his own Y Combinator-backed startup to acquisition. He has spent the past nine years as a digital nomad, living in 18 countries and experiencing everything from Día de los Muertos in Guadalajara to an unexpected swim in the Venice canals.
