Health insurance is just one of the benefits small businesses can offer their employees to stand out in this competitive job market. With unemployment low, small business owners can attract talented employees by finding the right balance of passion and nonfinancial perks to offer to them.
The federal government requires companies with more than 50 full-time employees to provide health benefits. If you employ fewer than 50 employees, you are not mandated to provide health coverage; yet research shows that affordable healthcare is the No. 1 benefit employees look for in a company. More than 70% of small businesses say health benefits impact employee retention.
How can you get health insurance for your employees? Read on to learn more about purchasing healthcare for your small business in 2025.
Know your options
The following are the five most common healthcare options available to small business owners:
- Qualified small employer health reimbursement arrangements (QSEHRAs). A QSEHRA is an option for small businesses with fewer than 50 employees. It allows you to provide a monthly tax-free allowance to your employees. Your employees then have the flexibility to pay for a personal health insurance policy or be reimbursed for their allowance amount. The QSEHRA contribution limits are $487.50 a month per single employee and $983.33 per month for families.
- Traditional group health insurance. In this instance, a small business takes out a group insurance policy through a traditional national corporation or a local company sourced through the public Small Business Health Options (SHOP) marketplace. The business pays a fixed premium for the policy; employees are responsible for deductibles and co-pays.
- Individual coverage health reimbursement arrangement (HRA). There's a second version of the QSEHRA known as the individual coverage HRA. In this model, employers of all sizes reimburse employees' qualifying medical expenses, like premiums for individual coverage or Medicare, on a tax-free basis. There's no annual allowed limit for reimbursement.
- Self-funded health insurance. Instead of paying a fixed premium to an insurer, the small business pays out of pocket for each claim as it arises under the self-funded insurance option. It increases the financial risk to the small business, but depending on the size of your enterprise, it might be more cost-effective in the long term.
- Association health plans (AHP). An AHP allows small businesses within the same industry or region to share a large-group coverage plan. The drawback is that AHPs aren't protected under the Affordable Care Act (ACA) rating rule, which prevents insurers from varying costs based on age, sex, or health status.
Each of these options presents different costs and benefits. Do some research to determine which option is right for you — depending on your location, the size of your business, and your budget.
Purchasing health insurance for your employees may allow you to take advantage of small business tax credits.
Shop for a plan
Where you go to find a plan depends on your company's size and location. The easiest option for nearly every small business is to check out your state's health insurance exchange marketplace. This site lets you compare plans and companies with ease.
If you're a sole proprietor, consultant, or freelancer, some states allow "groups of one" to purchase group insurance if you're registered as a business. Otherwise, you will need to buy individual or family health insurance through the ACA health insurance exchange or set up an HRA.
For small businesses with between two and 50 full-time employees, there are other places to buy insurance. Contact health insurance companies directly to find out what plans they offer. Look to consumer review sites like Consumer Affairs and the National Committee for Quality Assurance (NCQA) to find reputable companies that can be trusted. Or work with an insurance broker, a certified professional who can help you shop for the best plan.
Find out the full details of the coverage, including:
- The healthcare provider network.
- Premiums, deductibles, co-pays, and coinsurance payments.
- How much choice your employees will have.
- The insurance company's reputation.
With this information, you can make an informed decision about which health insurance plan to purchase.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
