How Much Does Group Health Insurance Cost for a Small Business?

Group health insurance for a small business costs an average of $768 per month for employee-only coverage and $2,171 for family coverage, based on 2025 premium data. These figures represent total premiums, not necessarily what employers pay themselves.

Actual costs depend on employee ages, location, coverage options, and how much the business contributes toward premiums. For employers planning a benefits budget, understanding these differences helps prevent unexpected expenses. Comparing average premiums, employer contributions, and available plan options provides a clearer picture of what group health insurance may cost.

Key Takeaways

• Average premiums: In 2025, group health insurance at firms with 10 to 199 workers averaged $768 monthly for employee-only coverage and $2,171 for family coverage.
• Employer contributions: Employers generally share premium costs with employees, and contribution percentages vary by coverage type and company policy.
• Cost factors: Employee ages, geographic location, dependent coverage, and plan design influence insurance premiums.
• Budget planning: Employers can estimate annual spending using employee enrollment, monthly premiums, and employer contribution percentages.
• Coverage choices: Comparing group plans, available tax credits, and ICHRA arrangements helps businesses assess options against their budgets and employees’ needs.

How Much Do Small Businesses Pay Toward Employee Health Insurance?

Small businesses generally pay a portion of their employees’ group health insurance premiums, with employees covering the remaining amount through payroll deductions. The exact contribution depends on the employer’s budget, plan requirements, and benefits policy.

According to the 2025 Employer Health Benefits Survey from KFF, businesses with 10 to 199 workers reported the following average annual premiums:

These are total premiums shared between employers and employees, not the employer’s cost alone. The same survey found that employees at businesses with 10 to 199 workers contributed an average of 16% toward employee-only premiums and 36% toward family premiums. Employers covered the remaining shares on average.

These figures are useful benchmarks, but they do not represent guaranteed rates for a particular business. They also cover a broader workforce-size category than the standard federal small-group insurance market. Actual employer expenses depend on the selected plan, enrolled employees, and contribution arrangement.

What Factors Affect Small Business Group Health Insurance Costs?

Group health insurance premiums vary based on the workforce, coverage location, and selected plan. For example, an employer consulting an insurance broker in Sumter, SC should compare quotes using the same employee information and coverage requirements. This makes it easier to identify differences in pricing and plan features without confusing location-related costs with coverage choices.

Common factors include:

• Employee age: Premiums can increase with age under applicable rating rules.
• Location: Insurance rates vary by geographic rating area, including within South Carolina.
• Coverage type: Family coverage generally costs more than employee-only coverage.
• Plan design: Deductibles, provider networks, and coverage levels affect premiums.
• Tobacco use: Some plans apply tobacco-related premium adjustments where permitted.

For Affordable Care Act (ACA) compliant small-group plans, insurers cannot base premiums on employees’ medical history or health status. The number of employees enrolled also affects the business’s total monthly expense, even when individual premiums remain unchanged. Employers should distinguish factors affecting each premium from factors affecting the overall benefits budget.

How Can Small Businesses Calculate Their Group Health Insurance Budget?

Employers can estimate their group health insurance spending by multiplying the monthly premium by the number of enrolled employees and the percentage the business contributes. For example, consider a company with 10 employees enrolled in employee-only coverage, using these hypothetical figures:

The calculation is:

$700 × 10 employees × 50% = $3,500 monthly

This example assumes every employee has the same premium. Actual group rates can differ by employee age, dependent enrollment, and other permitted rating factors. Businesses should also consider changes in enrollment during the year and any additional benefit-related expenses. A quote based on actual employee information provides a more reliable budget than a national average.

How Do Different Group Health Insurance Plans Affect Costs?

Different group health insurance plans can have different premiums, deductibles, and employee expenses. Employers should consider how each plan divides costs between the insurer and covered employees.

Common options include:

• Health Maintenance Organization (HMO): Generally uses a defined provider network and may require referrals for specialist care.
• Preferred Provider Organization (PPO): Typically offers more provider flexibility, including some out-of-network coverage.
• High-Deductible Health Plan (HDHP): Has a higher deductible meeting federal requirements and may offer lower premiums, depending on the plan.

A deductible is the amount an employee pays for covered services before certain insurance benefits begin. Plans also differ in copayments, coinsurance, and out-of-pocket limits. Comparing these expenses alongside premiums helps employers understand the financial impact on employees.

How Can Small Businesses Manage Group Health Insurance Costs?

Businesses can manage group health insurance spending by reviewing coverage choices, employer contributions, and available tax incentives. Comparing plans with different deductibles and provider networks can help identify options that fit the organization’s budget. Employers can also review how much they contribute toward employee-only and dependent coverage, subject to applicable plan requirements.

Eligible employers may qualify for the federal Small Business Health Care Tax Credit, which can offset part of their premium contributions. Another option is an Individual Coverage Health Reimbursement Arrangement (ICHRA). This allows employers to reimburse eligible individual health insurance expenses under an employer-funded arrangement rather than sponsoring traditional group coverage. These approaches involve different costs and responsibilities. Employers should consider employee coverage needs, eligibility requirements, and total spending before making changes.

How Can Small Businesses Compare Group Health Insurance Quotes?

Employers can compare group health insurance quotes more effectively by using consistent employee information and reviewing the same coverage features across plans. Begin by gathering employee ages, work locations, expected enrollment, and dependent coverage needs. Then compare monthly premiums alongside deductibles, provider networks, copayments, and out-of-pocket limits.

Consider the following questions:

• What will the business contribute annually?
• What will employees pay for premiums and medical services?
• Are preferred doctors and hospitals included?
• What participation or contribution requirements apply?

An experienced employee benefits insurance broker can help employers review coverage differences and understand available options. The goal is to choose coverage that fits the business’s financial capacity while considering employees’ healthcare needs, rather than focusing only on the lowest monthly premium.