To get small business health insurance, confirm whether your business qualifies for group coverage, compare plans on cost, deductible, network and drugs, then enroll through an insurer or through an agent or broker. Most employers with 50 or fewer full-time-equivalent employees are not required to offer coverage, so this is a decision you make on your own terms. This guide covers your options, what group coverage costs, the tax credit and a step-by-step way to buy.
TL;DR
- Employers with 1 to 50 full-time-equivalent (FTE) employees are not required to offer health insurance and face no penalty if they don't.
- Your main routes are a group plan (through SHOP or directly from an insurer), an association health plan, or a health reimbursement arrangement (HRA) that helps employees pay for their own coverage.
- Average employer-sponsored premiums in 2025 were $9,325 for single coverage and $26,993 for family coverage, and small-group rates are still rising.
- Employers with fewer than 25 employees who buy through SHOP may qualify for a tax credit of up to 50% of premium costs.
- An independent agency can compare carriers for you at no charge to you, which saves hours of quote-chasing.
Table of Contents
- Do you have to offer health insurance?
- Your options for covering employees
- Who qualifies for SHOP
- What small business health insurance costs
- The small business health care tax credit
- How to compare group health plans
- How to get coverage: a step-by-step path
- If you are self-employed with no employees
- Perspective: why the carrier comparison matters
- Get a free review of your coverage
- FAQ
- Sources
Do you have to offer health insurance?
If you have 1 to 50 FTEs, no. HealthCare.gov states that employers of this size are not required to offer insurance and face no penalty for skipping it. Washington's insurance commissioner says the same for businesses with 1 to 50 employees, and adds that you can decline group coverage and let employees buy individual plans.
That said, many owners offer coverage anyway. It helps with hiring and keeping people, and it gives you and your family access to a group plan. The question becomes how to offer it without blowing up your budget.
You control more than you might expect. CMS says employers decide which coverage to offer and how much to pay toward employee premiums. You can choose health and/or dental coverage, whether to cover dependents, and when coverage starts.
Your options for covering employees
There is no single "small business health plan." There are several routes, and the right one depends on headcount, budget and how much choice you want employees to have.
| Option | How it works | Best fit |
|---|---|---|
| Group plan through SHOP | A Marketplace program for small employers; you can offer one plan or a selection of plans | Employers with 1 to 50 FTEs who want group coverage and possible tax credits |
| Group plan direct from an insurer or agent | You buy a small-group plan from a carrier, often with an agent's help | Owners who want to compare carriers and networks |
| Association health plan | You join a group plan through an association | Businesses that belong to a qualifying association |
| HRA (QSEHRA or ICHRA) | You reimburse employees for medical costs, including individual premiums in some cases | Owners who want a fixed budget and employee choice |
| No group plan | Employees buy individual coverage on their own | Very small teams or businesses where owners cannot fund contributions |
HealthCare.gov lists group coverage through SHOP or a private insurer, and HRAs among the ways to help employees with medical costs. The Texas Department of Insurance adds association plans, self-funding and helping employees buy individual coverage to that list.
Group plans
This is the traditional route. You pick a plan (or several), set your contribution, and employees enroll. Washington's regulator notes a 1 to 50 employee business may buy directly from an insurer or agent, which is where an independent agency fits in.
HRAs
HRAs flip the model. Instead of choosing a group plan, you give employees a monthly allowance. The U.S. Chamber's 2026 guide describes ICHRAs as open to businesses of any size with no employer contribution limit. QSEHRAs are for businesses with fewer than 50 employees that do not offer a group plan, and they come with annual federal caps. Because those caps change, check the current figure with a tax professional before you set an allowance.
Who qualifies for SHOP
SHOP is the Small Business Health Options Program. CMS says it is generally available to employers with 1 to 50 FTEs, though some states let employers with up to 100 employees participate.
HealthCare.gov's checklist says you generally need:
- 1 to 50 FTEs
- at least one employee who is not an owner, a spouse or family member of an owner, or a partner
- coverage offered to all full-time employees
- the applicable participation rate (70% in most states)
- a worksite in the state you are enrolling in
A sole proprietor or self-employed person with no employees is not eligible for SHOP as an employer. CMS says that person may seek individual Marketplace coverage instead.
Participation and who counts as eligible
Insurers often set a minimum share of employees who must enroll. Texas says most insurers require at least 75% of full-time employees to participate, while employees who already have other coverage generally do not count against that number. Rules differ by state and carrier, so ask for the participation requirement in writing before you promise a plan to your team.
Who counts as eligible is also set by plan rules. Maine's regulator says eligible employees generally work at least 30 hours a week, and an employer may choose to include certain part-time employees, dependents or retirees under the plan's rules.
What small business health insurance costs
There is no honest flat number, but there are solid benchmarks. KFF's 2025 Employer Health Benefits Survey found average annual premiums of $9,325 for single coverage and $26,993 for family coverage, up 5% and 6% from 2024. Workers paid an average of $1,440 toward single coverage and $6,850 toward family coverage. Those are averages across all employer sizes, so your quotes will differ.
Premiums have kept climbing. KFF's analysis of preliminary filings projected a median 11% increase for ACA-compliant small-group plans in 2026 across 318 insurers. KFF says insurers mainly pointed to higher hospital, physician and prescription-drug costs.
What drives your quote
Small-group pricing has rules. Maine's regulator says premiums cannot vary by gender, health status, claims experience or policy duration, but may vary by age, tobacco use and geography. In practice, a team with an older average age or in a higher-cost area will see higher rates, while the plan you choose and how much you contribute are the levers you control.
A quick budget exercise
Take the KFF single-coverage worker contribution as a rough anchor. If you wanted to cover five employees on single plans and match the average premium share, you would multiply the employer share of $9,325 minus $1,440 by five. That is $7,885 per employee, or $39,425 a year. That is an illustration built from national averages, not a quote. Real figures depend on your state, ages and plan.
The small business health care tax credit
This is the most overlooked savings tool. CMS says employers with fewer than 25 employees who buy SHOP insurance may qualify for a credit worth up to 50% of premium costs, or up to 35% for tax-exempt employers.
The Maryland Health Benefit Exchange's 2025 to 2026 issuer manual spells out the conditions. Federal credit eligibility generally requires:
- fewer than 25 FTEs
- average annual wages below the inflation-adjusted limit
- an employer contribution of at least 50%
- coverage purchased through SHOP
The credit can be claimed for no more than two consecutive taxable years. Because the wage limit adjusts each year, confirm the current figure with your tax preparer or the IRS before you plan around it.
How to compare group health plans
CMS's employer guide says to compare monthly cost, deductible, provider network and prescription-drug coverage. That is a good short list. Here is how to use it.
Metal tiers and the core trade-off
Wisconsin's insurance commissioner describes Bronze, Silver, Gold and Platinum plans as covering about 60%, 70%, 80% and 90% of average covered costs. Lower premiums generally mean employees pay more when they use care. Higher tiers cost more each month but cost employees less at the doctor.
A practical rule: if your team is young and healthy, a lower-premium plan with a higher deductible may stretch your budget. If your team has families or ongoing prescriptions, a higher tier may be the fairer benefit.
Network and drugs
A cheap plan is no bargain if your employees' doctors are out of network. Before you commit, pull the provider directory and check the clinics your team already uses. Do the same with the formulary for any common prescriptions.
Your contribution
Decide your contribution first, then shop. Setting a dollar amount per employee, or a percentage of the employee-only premium, gives you a predictable cost. If you plan to use the tax credit, remember the 50% employer contribution condition above.
How to get coverage: a step-by-step path
- Count your FTEs. Include full-time employees and the full-time equivalent of part-timers. This decides SHOP and tax-credit eligibility.
- Set a budget. Pick the monthly amount you can contribute per employee.
- Check participation rules. Ask carriers for the required enrollment percentage and how waivers for employees with other coverage are treated.
- Gather quotes. Get several options across tiers and networks, not just the cheapest.
- Compare on the four factors. Monthly cost, deductible, network and drug coverage.
- Enroll. CMS says you can enroll through an insurer or with help from a SHOP-registered agent or broker.
- Announce and onboard. Give employees plain-language summaries and a clear enrollment deadline.
- Review every year. Renewal rates move, so re-compare before each renewal.
If you are self-employed with no employees
Sole proprietors have different options because SHOP is for employers with employees. Individual Marketplace coverage is the usual path, and the Marketplace has an annual open enrollment period that starts each fall. Our guide on self-employed health coverage and special enrollment explains the timing, and our open enrollment guide covers the yearly window. For individual and family plans, see our health insurance page.
Health insurance is one piece of protecting a business. If you also need liability or property coverage, our business insurance team can review the rest of your program.
Perspective: why the carrier comparison matters
Most owners we talk to start with one question: what's the cheapest group plan? The better question is which plan your team will actually use well. A low premium with a network that misses your employees' doctors is a cost, not a saving.
That's why we compare coverage across more than 25 A-rated carriers instead of showing you one company's menu. We explain deductibles, networks and contributions in plain language, so you know what you are buying before you sign.
We also stay with you after the sale. Our approach to claims is advocacy, and our policy review is free, so you can see where your current coverage stands before you change anything.
David
Get a free review of your coverage
If you already carry coverage, start with our free policy review. We look at what you have, point out gaps and explain the options in plain language. It costs you $0 and there is no obligation. If you want to compare options, you can also request insurance quotes.
We are an independent agency, so we compare across carriers rather than selling you one company's plans. Start at our free policy review page and tell us about your business.
FAQ
How do I get health insurance if I own a small business?
First decide whether you want a group plan for employees or coverage only for yourself. If you have employees, check SHOP eligibility, compare plans, and enroll through an insurer or an agent or broker. If you have no employees, you can look at individual Marketplace coverage instead.
What type of insurance does a small business need besides health coverage?
Health insurance is optional for most small employers, but other coverage is a core part of protecting a business. General liability, commercial property and coverage for your specific risks are common starting points, and your needs depend on your industry. Our business insurance quote page is a good place to start.
How much is group health insurance for a small business?
There is no flat figure. KFF's 2025 survey found average annual premiums of $9,325 for single coverage and $26,993 for family coverage across employers. Your quote depends on location, employee ages, tobacco use and the plan tier you choose.
How many employees do I need for group coverage?
SHOP generally serves employers with 1 to 50 FTEs, and it requires at least one employee who is not an owner, an owner's family member or a partner. Some states allow up to 100 employees. Insurers also set their own participation minimums, such as 75% of full-time employees in Texas.
Sources
- Choose and enroll in SHOP health insurance | HealthCare.gov
- Health insurance for businesses | HealthCare.gov
- Find out if your small business qualifies for SHOP | HealthCare.gov
- Small Business Health Options Program (SHOP) | CMS
- Employer Guide to SHOP Insurance | CMS
- Small business health plan options | Washington Office of the Insurance Commissioner
- How to get health coverage for your employees | Texas Department of Insurance
- Small Business Guide to Health Insurance | Maine Bureau of Insurance
- Small Business Health Insurance Options: A Guide | U.S. Chamber of Commerce
- 2025 Employer Health Benefits Survey | KFF
- How Much and Why Premiums are Going up for Small Businesses in 2026 | KFF
- Small Business Issuer Reference Manual 2025-2026 | Maryland Health Benefit Exchange
- Small Employers and their Employees | Wisconsin Office of the Commissioner of Insurance