Yes. If you want the Florida small-employer health benefit plan — the guaranteed-issue, modified-community-rated coverage that Florida’s Employee Health Care Access Act governs — your business has to have its principal place of business in Florida. This is not a preference, a filing convenience, or something an agent arranges around. It sits inside the statutory definition of who a Florida small employer is, at Fla. Stat. § 627.6699(3)(v), and it appears in both limbs of that definition. An employer that does not meet it is not a Florida small employer, which means the entire structure built on that definition — guaranteed issue, modified community rating, Florida’s small-group protections — is not the structure that applies to it.
That makes this a threshold question rather than a detail. It is natural to open with how many employees you need. Florida asks a prior question, and it asks it about the business, not the payroll.
Where the requirement actually lives
Fla. Stat. § 627.6699 is the Employee Health Care Access Act. Subsection (3) is its definitions subsection, and paragraph (v) is where “small employer” is defined. The definition is split into two numbered subparagraphs, one for a grandfathered health plan and one for a nongrandfathered health plan, and the Florida location test is in each.
The grandfathered limb, § 627.6699(3)(v)1., defines a small employer as:
“any person, sole proprietor, self-employed individual, independent contractor, firm, corporation, partnership, or association that is actively engaged in business, has its principal place of business in this state, employed an average of at least 1 but not more than 50 eligible employees on business days during the preceding calendar year, the majority of whom were employed in this state, employs at least 1 employee on the first day of the plan year, and is not formed primarily for purposes of purchasing insurance.”
The nongrandfathered limb, § 627.6699(3)(v)2., defines it as:
“any employer that has its principal place of business in this state, employed an average of at least 1 but not more than 50 employees on business days during the preceding calendar year, and employs at least 1 employee on the first day of the plan year. As used in this subparagraph, the terms ‘employee’ and ‘employer’ have the same meaning as provided in s. 3 of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. s. 1002.”
Notice what survives the move from one limb to the other. The Florida location test does. Strip the grandfathered limb of everything the nongrandfathered limb dropped, and “has its principal place of business in this state” is still standing in both.
The section’s history line runs to s. 30, ch. 2020-9 — the most recent amendment the source record establishes. That vintage is worth stating plainly, because a reader checking this against a summary written years ago will find the same sentence and should.
What the grandfathered limb asks beyond location
The grandfathered limb is the longer one, and its extra conditions are all about being a real, operating Florida business rather than a shell assembled around a policy.
It requires the employer to be “actively engaged in business.” It requires that of the eligible employees counted, “the majority of whom were employed in this state.” And it requires that the employer is “not formed primarily for purposes of purchasing insurance.”
That last clause is the anti-abuse clause, and it is the one an employer with an unusual structure should read twice. An arrangement whose main reason for existing is to assemble a group and buy coverage for it is exactly what the sentence excludes.
The majority-employed-in-this-state condition is separate from the principal-place-of-business condition and does different work. A business could have its principal place of business in Florida and still fail the majority test if most of its eligible employees work somewhere else. Under the grandfathered limb, both have to hold.
There is also a closing sentence in the same subparagraph aimed at the smallest end of the market: “For purposes of this section, a sole proprietor, an independent contractor, or a self-employed individual is considered a small employer only if all of the conditions and criteria established in this section are met.” The word doing the work there is all.
The nongrandfathered limb keeps the anchor and borrows ERISA’s vocabulary
The nongrandfathered limb is leaner. It keeps the Florida location test, keeps the average-employees-on-business-days counting method and the at-least-one-employee-on-the-first-day-of-the-plan-year requirement, and then does something the other limb does not: it hands the definitions of “employee” and “employer” to federal law, specifically section 3 of ERISA at 29 U.S.C. s. 1002.
That is a meaningful difference for anyone whose workforce includes people whose classification is genuinely arguable. Under the nongrandfathered limb, the argument is conducted in ERISA’s vocabulary, not in a Florida-specific one. Under the grandfathered limb, the count is of eligible employees, which Florida defines separately in the same section.
What the nongrandfathered limb does not drop is the sentence this whole post is about.
Principal place of business and principal business address are different tests
Here is the confusion this post exists to clear, and it is a genuine one because the two phrases are nearly the same words.
Federal rules for the small group market contain their own location concept. 45 CFR § 147.102(a)(1)(ii)(B) provides that rating area is determined, “In the small group market, using the group policyholder’s principal business address.” That rule sits inside the federal list of factors a rate may vary by, and its job is to sort a group into a rating geography.
Fla. Stat. § 627.6699(3)(v) uses “principal place of business in this state” for a completely different job. It is not sorting anyone into a geography. It is deciding whether the employer is a Florida small employer at all.
Put them in sequence and the difference is obvious. The Florida test runs first and answers a yes-or-no question: are you inside this market? The federal rating-area rule runs afterward and answers a which-one question: given that you are inside it, which geography rates you? Fail the Florida test and the federal rating-area rule never gets a turn, because there is no Florida small-group rate to locate.
Merging them produces a specific and confident-sounding error — the belief that because a group is rated from its principal business address, having an address in Florida is the whole story. It is not. One is an eligibility instrument; the other is a rating instrument. They happen to share vocabulary.
Related companies are measured as one employer
An employer that runs several related entities will want to know whether each is counted on its own. Under the grandfathered limb, no. Fla. Stat. § 627.6699(3)(v)1. provides:
“In determining the number of employees, companies that are an affiliated group as defined in s. 1504(a) of the Internal Revenue Code of 1986, as amended, are considered a single employer.”
The aggregation rule and the location rule interact, and the interaction is where real cases get interesting. If related companies are one employer for counting purposes, then the question of where that employer’s principal place of business sits is a question about the aggregate, not about whichever entity happens to hold the Florida lease. Employers with a genuinely multi-entity structure should get the aggregation answer first, because it changes what the location question is even being asked about.
Being eligible and electing coverage are separate steps
Meeting the definition does not, by itself, put a policy in force. Florida’s guaranteed-issue requirement runs at carriers, and it describes a different band.
Fla. Stat. § 627.6699(5)(b) requires that “Every small employer carrier must, as a condition of transacting business in this state, offer and issue all small employer health benefit plans on a guaranteed-issue basis to every eligible small employer, with 2 to 50 eligible employees, that elects to be covered.”
Note what the sentence does and does not say. The band written into the guaranteed-issue sentence is not the same band written into the definition — read them side by side rather than assuming they match. And the operative verb applied to the employer is elects. The statute’s own purpose clause says the same thing from the other direction: § 627.6699(2) describes the intent as “to promote the availability of health insurance coverage to small employers regardless of their claims experience or their employees’ health status.” Availability is a duty on carriers to sell. It is not a duty on employers to buy.
Federal guaranteed availability carries its own qualification. 45 CFR § 147.104 requires an issuer to offer every product approved for sale in the market and to accept any employer that applies, but it says so “Subject to paragraphs (b) through (d) of this section” — and paragraph (b) is where employer contribution and group participation rules, as allowed under applicable state law, live. Guaranteed issue and participation requirements are two halves of one accurate sentence. Either half on its own misleads.
What to settle before you ask anyone for a proposal
A short list is worth having answered in writing before a first proposal is requested, and none of it requires a quote to answer.
Where is the principal place of business, and can you show it? If the answer is obviously Florida — headquarters here, management here, operations here — this takes a minute. If the answer is arguable, it is better argued now than at a plan year boundary.
Are you one employer or several? Run the affiliated-group question before the headcount, because it determines whose employees are being counted.
Which limb are you in? Grandfathered and nongrandfathered are not stylistic labels here; they select different counting units and different extra conditions. Knowing which sentence of the statute you are reading against is the difference between a clean answer and a plausible one.
What this post does not tell you
Some honest limits, stated rather than papered over.
Florida does not define “principal place of business” inside § 627.6699. The phrase is used and not explained, and the source record for this post retrieved no Florida Administrative Code rule layer — the statute grants the Financial Services Commission rulemaking authority in several places, and those rules were not read. So this post can tell you the test exists and where it sits; it cannot hand you a bright-line definition of the term, and a page that invented one would be making it up.
And the currency claim here is limited to what the history line proves. The most recent amendment established for § 627.6699 is s. 30, ch. 2020-9. The 2026 session was not checked for pending or enacted changes, and Florida’s own statutes site carries a disclaimer directing anyone with an official purpose to the journals or printed bills of the respective chambers. Treat this as an accurate description of the statute as retrieved, and confirm anything you are about to rely on.
The bottom line
Florida’s small-employer definition carries a location test that no headcount can satisfy: both limbs of Fla. Stat. § 627.6699(3)(v) require the employer to have its principal place of business in this state. Settle that question before you count a single employee, because it decides whether the Florida small-group rules apply to you at all.
Frequently asked questions
Where exactly does Florida say my business has to be located here?
In the definition of “small employer” at Fla. Stat. § 627.6699(3)(v), which is part of the Employee Health Care Access Act. The definition has two numbered subparagraphs — one for a grandfathered health plan and one for a nongrandfathered health plan — and the phrase “has its principal place of business in this state” appears in each of them. That placement matters. The requirement is not a condition attached to a particular product or a particular carrier; it is part of the test for whether you are a Florida small employer in the first place, and everything Florida builds on that definition follows from it.
My company is incorporated in another state but all of my employees work in Florida. Does that work?
The statute does not ask where you are incorporated. It asks where your principal place of business is. For a nongrandfathered health plan, Fla. Stat. § 627.6699(3)(v)2. requires an employer that “has its principal place of business in this state,” employed an average of at least 1 but not more than 50 employees on business days during the preceding calendar year, and employs at least 1 employee on the first day of the plan year. A grandfathered health plan adds a separate Florida test on top of that one — the majority of the eligible employees must have been employed in this state. Because the statute does not define principal place of business inside the section itself, an employer whose answer is not obvious should get it settled in writing before a plan year begins rather than assume it.
Is this the same rule as the federal one about my principal business address?
No, and merging them is the error this page exists to prevent. 45 CFR § 147.102(a)(1)(ii)(B) says that in the small group market the rating area is determined “using the group policyholder’s principal business address.” That is a rule about which rating area applies to a group whose eligibility is already established. Fla. Stat. § 627.6699(3)(v) uses principal place of business for a different job entirely — deciding whether the employer is a Florida small employer at all. Similar words, two different instruments, two different questions. One sorts you into a geography; the other decides whether you are in the room.
We run several related companies. Are they counted separately?
Not under the grandfathered limb. Fla. Stat. § 627.6699(3)(v)1. provides that “In determining the number of employees, companies that are an affiliated group as defined in s. 1504(a) of the Internal Revenue Code of 1986, as amended, are considered a single employer.” So a group of related companies is measured as one employer for the headcount, not as a set of small ones. If your corporate structure is genuinely a related-company structure, the aggregation question should be answered before the location question is even useful, because it changes what you are measuring.
Does meeting the definition mean a carrier has to sell me a plan?
Meeting the definition is the first gate, not the last one. Fla. Stat. § 627.6699(5)(b) requires that “Every small employer carrier must, as a condition of transacting business in this state, offer and issue all small employer health benefit plans on a guaranteed-issue basis to every eligible small employer, with 2 to 50 eligible employees, that elects to be covered.” Read that band carefully — it is narrower than the definition band in (3)(v), and the statute says the employer elects. Federal guaranteed availability is also expressly subject to further conditions, including participation and contribution rules allowed under applicable state law, so an employer can satisfy every definition and still be steered by those rules.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. He works through Florida’s small-employer eligibility test with employers whose owners, worksites and payroll do not all sit in one state. Start with the Wexford Health Insurance quote form.