Short answer: Yes. Each state sets its own small-group rules; group-size definition, rating method, tobacco rules, and continuation laws, so a fully-insured plan follows the rules where it’s issued. Self-funded ERISA plans largely avoid these state variations.
A business with employees in several states runs into different state rules: whether a small group is 1 to 50 or 1 to 100, whether age or community rating applies, whether tobacco surcharges are allowed, the number of rating areas, and how mini-COBRA continuation works. A fully-insured plan generally follows the rules of the state where it’s sitused and where employees live/work, which can mean out-of-area employees need a national (PPO) network. Self-funded ERISA plans are largely exempt from these state mandates, which is one reason multi-state employers consider them.