For small business owners, offering health insurance can be a powerful tool to attract top talent and support a healthy workforce. However, if you’re just starting out or managing a small team, you may wonder if providing health insurance is required. The answer depends largely on the size of your business and your budget.

Here’s a quick guide to help small business owners understand small business health insurance plans, coverage requirements, compliance, and how to find the best option for their team.

Health Insurance Requirements for Small Businesses

Health insurance obligations vary for small businesses based on their size. The Affordable Care Act (ACA) outlines specific requirements according to the number of full-time equivalent employees (FTEs) in a business:

Fewer Than 50 Full-Time Equivalent Employees (FTEs):

• Not required to offer health insurance. 

• While health insurance is optional for small businesses, many offer it to appeal to potential employees and improve retention.

50 or More FTEs:

• Required to offer health benefits for at least 95% of full-time employees under employer-shared responsibility rules.

• Must provide affordable coverage that meets ACA minimum essential coverage standards or pay a tax penalty.

Benefits of Offering Health Insurance for Small Businesses

Providing health insurance offers significant benefits for small employers, strengthening their competitiveness in the job market. In a recent study, 88% of U.S. workers ranked medical coverage as a top priority when choosing an employer. 

Private health insurance plans allow small employers to attract top talent who prioritize comprehensive benefits. Group health insurance plans can improve employee morale, productivity, and loyalty by supporting physical and mental well-being. 

Small businesses with fewer than 25 FTEs can also benefit from tax incentives for offering health insurance. For example, companies may qualify for the Small Business Health Care Tax Credit if they pay average wages below a certain threshold and cover at least 50% of employee-only premiums in an approved plan. 

The Small Business Health Options Program (SHOP) provides a marketplace where eligible businesses can explore insurance options to help meet these requirements.

Types of Private Health Insurance Plans for Small Businesses

In addition to marketplace policies, small companies can explore affordable private health insurance plans through private insurance companies. These health insurance options often provide more flexibility and customizability based on industry and coverage needs:

• Self-employed business insurance. Self-employed professionals like realtors and personal trainers can find health insurance options tailored to their needs, covering essential benefits while accommodating flexible work hours and income variability.

• Healthcare practices. Private practice insurance can help cover providers, like therapists, doctors, or chiropractors, and their staff. These policies help healthcare professionals provide coverage to protect the well-being of themselves and their staff. 

• Food service. Health insurance for food service businesses, such as coffee shops and restaurants, offers coverage options tailored to businesses of all sizes, enabling employers to provide essential health benefits to their teams

• General small business: General small business insurance provides comprehensive coverage suitable for various industries, making it a practical choice for employers seeking affordable benefits for eligible employees. 

Cost of Health Insurance for Small Businesses

As a small employer, it’s natural to wonder how much a health insurance plan is for a small business. Here’s a breakdown of cost considerations when choosing a plan:

• Premiums. This is the monthly fee to keep the policy active and cover services like doctor visits and preventive care. In 2024, the average yearly small business premium for single coverage was $9,131 and $25,167 for family coverage. Choose a plan with manageable monthly health insurance premiums for your employees.

• Deductibles. A deductible is the amount employees pay out-of-pocket before the insurance covers most costs. In 2024, the average deductible for small firms was $2,575. A higher deductible can lower your premium costs but may increase employee out-of-pocket expenses.

• Employer contributions. Employers typically cover a portion of health insurance costs to make it more affordable for employees. On average, small companies paid about 14% of premium expenses in 2024. When selecting a plan, determine how much you can contribute to support your team while staying within your budget. 

Support Your Business and Employees With United National Healthcare

Providing health coverage demonstrates to employees that their well-being and future are valued, boosting commitment and loyalty—a crucial step for any growing small business. To cultivate a dedicated team, consider adding a private plan from United National Healthcare to your benefits package.

At United National Healthcare, we offer affordable, flexible health insurance for small businesses. From basic plans and family coverage to comprehensive options, we have tailored choices for your industry and company size.

Contact our team today for a free consultation and customized quote. Let’s find the right plan to support your business and team.