How to Get Health Insurance for a Small Business

Small business owners can get health insurance for their employees by purchasing a group plan, exploring the Small Business Health Options Program (SHOP), or offering certain health reimbursement arrangements. The process involves checking eligibility, setting a budget, comparing coverage options, and enrolling employees.

Choosing the right approach matters because insurance costs, employee needs, and participation requirements can vary. Employers also need to understand their responsibilities before offering coverage. This guide explains how to get health insurance for a small business, what different options cost, and how to complete the enrollment process.

Key Takeaways

• Health insurance requirements: Most businesses with fewer than 50 full-time equivalent employees are not subject to the ACA employer shared responsibility provisions.
• Coverage options: Employers can explore traditional group insurance, SHOP coverage, ICHRA, or QSEHRA, depending on eligibility and workforce needs.
• Getting coverage: The process involves reviewing employee eligibility, setting a budget, gathering information, comparing quotes, selecting coverage, and completing enrollment.
• Insurance costs: Premiums vary by location, employee characteristics, and plan design. Employers should compare total costs rather than monthly premiums alone.
• Tax credits: Certain employers with fewer than 25 full-time equivalent employees may qualify for a federal health insurance tax credit when applicable requirements are met.

Do Small Businesses Have to Provide Health Insurance?

Most small businesses are not federally required to provide health insurance. Under the Affordable Care Act (ACA), the employer shared responsibility rules generally apply to companies with 50 or more full-time employees, including full-time equivalent employees, based on the previous calendar year.

A full-time equivalent (FTE) calculation accounts for hours worked by part-time employees when determining employer size. Businesses under the threshold generally do not face the ACA employer shared responsibility provisions, although common ownership rules can affect this determination.

Employers that voluntarily offer coverage must still follow applicable insurance and employee benefits regulations. Eligibility for group insurance is a separate consideration, and some plans require at least one qualifying employee other than the owner or the owner’s spouse.

State-specific requirements can also affect available coverage. For example, a business in Goose Creek, South Carolina, can consult an insurance agency in Goose Creek, SC to understand applicable group insurance eligibility and coverage options before purchasing a plan.

What Health Insurance Options Are Available to Small Businesses?

Small businesses can provide employee health coverage through traditional group insurance, SHOP plans, or employer-funded health reimbursement arrangements. The right option depends on the number of eligible employees, available budget, coverage preferences, and applicable insurance requirements.

Traditional group plans provide employer-sponsored coverage under an insurance policy. SHOP offers a purchasing option for qualifying employers, while health reimbursement arrangements allow employees to receive reimbursements for eligible healthcare expenses. These approaches have different rules for eligibility, employee contributions, and administration. Understanding the differences helps employers decide whether they want to select group coverage for employees or support employees who obtain eligible individual health insurance.

Traditional Group Health Insurance

Traditional group health insurance allows employers to purchase coverage for eligible employees under an employer-sponsored plan. The business selects available coverage options and determines its premium contribution, subject to applicable requirements. Employees may pay the remaining premium through payroll deductions. Employers can compare group plans directly with insurance companies or work with a licensed insurance broker to evaluate coverage, costs, and enrollment requirements.

SHOP Health Insurance

The Small Business Health Options Program (SHOP) helps eligible employers obtain group health or dental insurance. SHOP generally serves businesses with 1–50 eligible employees, although availability and requirements vary by state. Eligible employers can generally enroll throughout the year. Coverage is purchased through participating insurance companies or with assistance from SHOP-registered agents or brokers. Certain employers may also qualify for a federal health insurance tax credit.

ICHRA and QSEHRA

Health reimbursement arrangements (HRAs) allow employers to reimburse qualifying employee medical expenses under specific rules. An Individual Coverage Health Reimbursement Arrangement (ICHRA), now also called a CHOICE Arrangement, supports employees with qualifying individual coverage. A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is generally available to eligible employers with fewer than 50 employees that do not offer group health coverage. Both have distinct eligibility, reimbursement, and tax rules. Businesses considering this approach can learn more about individual coverage reimbursement arrangements.

How to Get Health Insurance for a Small Business: Step by Step

Getting health insurance for a small business involves identifying employee needs, confirming eligibility, establishing a budget, comparing available coverage, and completing enrollment. The process begins with determining how many employees need insurance and whether the business qualifies for group coverage. Employers can then decide how much they are prepared to contribute toward premiums. Once the budget is established, the next steps involve gathering the information insurers require, requesting quotes, and reviewing available plans.

Employers should compare more than monthly premiums. Provider networks, deductibles, prescription coverage, and employee out-of-pocket expenses can affect whether a plan meets the workforce’s needs. After choosing coverage, the employer must submit the application, coordinate employee elections, and confirm the policy’s effective date. The following six steps explain the process in greater detail, including the information employers should prepare and the decisions they need to make before coverage begins.

Step 1: Review Your Employee Needs and Eligibility

Start by identifying which employees qualify for coverage and what healthcare needs the workforce may have. Review employee counts, working hours, eligibility classifications, and dependent coverage needs. Consider whether employees prefer particular doctors, hospitals, or prescription benefits. Employee preferences can help employers identify suitable plans, while applicable insurer rules determine participation and enrollment eligibility.

Step 2: Set Your Health Insurance Budget

Determine how much the business can contribute toward employee health insurance premiums. Consider the total monthly premium, employer contribution, employee payroll deductions, and potential dependent coverage costs. For example, an employer might choose to cover a portion of employee-only premiums while employees contribute the balance. Check minimum contribution requirements before finalizing the budget.

Step 3: Gather Your Business and Employee Information

Insurance companies generally require business and employee details before preparing quotes or processing enrollment. Common information includes:

• Business name, address, and Employer Identification Number (EIN)
• Employee ages or dates of birth and ZIP codes
• Number of eligible employees
• Desired coverage start date
• Existing coverage information, if applicable

Specific documentation requirements vary by insurer and coverage arrangement.

Step 4: Request and Compare Health Insurance Quotes

Request quotes from insurance companies or work with a licensed insurance broker to compare available coverage. Review premiums, deductibles, provider networks, prescription benefits, and employee cost-sharing requirements. An insurance broker can explain differences between plans and help employers understand enrollment conditions. Benni Agency’s insurance broker services can support businesses reviewing their available insurance options.

Step 5: Choose a Plan and Complete Enrollment

Select the preferred plan after confirming its coverage details, contribution requirements, and enrollment conditions. Submit the employer application and coordinate employee enrollment forms or online elections. Verify eligibility information, applicable deadlines, and the requested effective date. Complete any required initial premium payment and obtain confirmation that coverage has been approved before informing employees that their insurance is active.

Step 6: Communicate Coverage Details and Manage the Plan

Once coverage begins, provide employees with relevant policy information, identification cards, and instructions for accessing their benefits. Keep enrollment records updated when employees join, leave, or experience qualifying life events. Review premium deductions and renewal notices regularly. Employers should also maintain procedures for communicating coverage changes and meeting applicable employee benefits administration requirements.

How Much Does Health Insurance Cost for a Small Business?

Small business health insurance costs depend on employee ages, geographic location, coverage type, and plan design. Employer contribution decisions also determine how much the business pays. According to KFF’s 2025 Employer Health Benefits Survey, average annual employer-sponsored premiums were:

• $9,325 for single coverage
• $26,993 for family coverage

These figures represent total premiums across surveyed employers, not solely the employer-paid portion. Actual costs can differ considerably. Employers should also review deductibles, copayments, coinsurance, and out-of-pocket maximums. A deductible is the amount an employee generally pays for covered services before certain insurance benefits begin. A lower monthly premium does not always mean lower overall healthcare expenses. Comparing the full cost of coverage helps employers make a more informed decision.

Can Small Businesses Get Tax Credits for Health Insurance?

Yes. Some employers may qualify for the federal Small Business Health Care Tax Credit when they provide qualifying employee health insurance. According to the Internal Revenue Service (IRS), eligible employers generally must:

• Have fewer than 25 full-time equivalent employees.
• Meet applicable average annual wage limits.
• Pay at least 50% of qualifying employee-only premium costs.
• Obtain qualifying coverage through SHOP, subject to applicable exceptions.

The maximum credit is 50% of qualifying employer-paid premiums, or 35% for eligible tax-exempt employers. The credit is generally available for two consecutive taxable years. The actual amount depends on employee count, wages, and other eligibility conditions. Employers can review the IRS health insurance tax credit guidance and consult a qualified tax professional before claiming the credit.

What Should Small Businesses Check Before Choosing Health Insurance?

Before purchasing health insurance, employers should confirm that the selected plan meets their workforce’s needs and the business’s financial requirements. Review these factors:

• Provider network: Are preferred doctors, hospitals, and specialists included?
• Employee costs: Are premiums, deductibles, and copayments manageable?
• Prescription coverage: Are commonly needed medications covered?
• Participation requirements: Does the business meet applicable enrollment rules?
• Coverage start date: When will employee insurance become effective?
• Renewal conditions: How will future premium changes and coverage updates be handled?

Businesses with employees in different states should also consider provider network availability and state-specific insurance requirements. A final review can identify coverage limitations or enrollment issues before the employer commits to a plan.