Providing health insurance is one of the smartest decisions a small business owner can make. Many entrepreneurs ask: how to get health insurance for a small business without paying very high premiums?
The good news is that there are multiple affordable small business health insurance options available today. In this guide, we will explain how small businesses can get health insurance, available plans, costs, eligibility, and tips to save money.
What Is Small Business Health Insurance?
Small business health insurance is a group health insurance plan offered by employers to cover medical expenses of employees and sometimes their families. These plans typically include:
- Doctor visits
- Hospitalization
- Prescription drugs
- Preventive care
Offering health insurance helps businesses attract talent, reduce employee turnover, and receive tax benefits.
Who Is Eligible for Small Business Health Insurance?
Most insurers define a small business as one with 1 to 50 employees (up to 100 in some states).
Eligibility usually requires:
- At least one full-time employee (other than the owner)
- Business registration documents
- Minimum employee participation (usually 70%)
How to Get Health Insurance for a Small Business (Step-by-Step)
Step 1: Decide Your Budget
First, determine how much your business can contribute toward employee premiums. Many employers pay 50–70% of the premium, while employees pay the rest.
Step 2: Choose the Right Type of Health Insurance Plan
1. Small Business Group Health Insurance
This is the most common option.
Pros:
- Lower group rates
- Better coverage
- Tax advantages
Cons:
- Participation requirements
2. SHOP Marketplace Health Insurance
The Small Business Health Options Program (SHOP) is a government marketplace for small employers.
Benefits:
- Access to tax credits
- ACA-compliant plans
- Multiple insurer options
Best for: Businesses with 1–50 employees
3. Health Reimbursement Arrangement (HRA)
With an HRA, employers reimburse employees for individual health insurance.
Pros:
- Flexible
- Cost-controlled
- No group policy needed
Popular option: QSEHRA (Qualified Small Employer HRA)
4. Private Health Insurance Providers
You can also buy directly from private insurers or through brokers.
Pros:
- More customization
- Broader provider networks
Step 3: Compare Health Insurance Plans
Compare plans based on:
- Monthly premiums
- Deductibles
- Network hospitals
- Prescription coverage
- Employee needs
Always compare multiple quotes before finalizing.
Step 4: Work With a Health Insurance Broker
A licensed broker can:
- Compare multiple insurers
- Handle paperwork
- Help with compliance
Brokers usually do not charge employers directly.
Step 5: Enroll Employees & Manage the Plan
Once selected:
- Share plan details with employees
- Collect enrollment forms
- Set up payroll deductions
Most insurers provide online dashboards for easy management.
How Much Does Health Insurance Cost for a Small Business?
The average cost of small business health insurance depends on coverage and location.
Average Monthly Cost Per Employee
- Single coverage: $400 – $700
- Family coverage: $1,000 – $1,800
Employers typically contribute 50–70% of the cost.
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Tax Benefits of Small Business Health Insurance
Small businesses can get:
- Tax deductions on premiums
- Small business health care tax credit (via SHOP)
- Reduced payroll tax burden
These benefits significantly reduce the actual cost of providing coverage.
Is Health Insurance Mandatory for Small Businesses?
- Businesses with fewer than 50 employees are not legally required to offer health insurance.
- Businesses with 50+ full-time employees may face penalties under ACA if they don’t provide coverage.
Even when not mandatory, offering health insurance is a competitive advantage.
How to Reduce Small Business Health Insurance Costs
You can lower costs by:
- Choosing high-deductible plans
- Offering HRA instead of full group plans
- Encouraging employee wellness programs
- Comparing plans annually
- Limiting unnecessary add-ons
These strategies can reduce premiums by 20–30%.
Benefits of Offering Health Insurance to Employees
Providing health insurance helps:
- Improve employee retention
- Increase productivity
- Attract skilled workers
- Build company reputation
- Reduce absenteeism
It’s an investment, not just an expense.
Common FAQs About Small Business Health Insurance
Can a small business with one employee get health insurance?
Yes, in many states single-employee businesses qualify.
Is small business health insurance tax deductible?
Yes, premiums are usually tax deductible.
Can employees choose their own plans?
Yes, with HRA or flexible group plans.
Final Thoughts
Understanding how to get health insurance for a small business helps you protect both your employees and your company’s future. Whether you choose a group health plan, SHOP marketplace, or HRA, there are affordable options available for every budget.
Providing health insurance builds trust, loyalty, and long-term growth for your business.