Small Business Health Insurance

If your company employs at least two, but no more than fifty people, small business health insurance can benefit both you and your employees alike. When you choose a group plan, you can save on personal health care costs, increase tax deductions, and boost job satisfaction within your company.


This guide:

  • Explains how small business health insurance works

  • Helps you design a small business health insurance plan

  • Introduces group insurance regulations in effect in your state

Get a free quote for your small business

You can get an online quote, or speak to an agent in your area who can help you decide on what options are best for your small business.


Start by telling us what state you are in:

ATTENTION: Only businesses with 2-50 employees qualify for small business health insurance. If you are self-employed and no one else works for you, look into buying health insurance for self employed individuals.

How a small business health insurance plan will help

If you own or belong to a business or organization of between 2 and 50 people, chances are you qualify for (and would benefit from) a group health insurance plan.

Small business health insurance has lots of benefits. Besides providing medical care for yourself and your employees, a small business health insurance plan helps spread the financial risk between all the members, which usually means lower premiums and more extensive coverage for everyone in your company. This is a clear win-win situation.

Additionally, group health insurance has tax advantages too. Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees will save on their payroll taxes.

Certain other groups, such as non-profit organizations, are also generally eligible for group health insurance so long as they can demonstrate that they have two or more full-time taxable employees.

How group health insurance works

A small business health insurance plan provides coverage for its members with rates calculated on a kind of bulk rate for the group. Employees may be able to add their own policy riders and have additional coverage to customize the policy to meet their specific needs, such as adding or subtracting optical or family care, but the basic policy format will remain the same for the whole group.

Likewise, though small business health insurance comes in a variety of shapes and sizes (e.g. fee-for-service, HMO, PPO, POS, all of which are explained in-depth on our pages concerning the various policy types), the format that you choose for the company will apply to all the group members. It is possible to purchase a group indemnity policy, but the managed care plans are more affordable for every pay scale and, therefore, are much more common.

Health insurance premiums are calculated differently both from state to state and from company to company. The cost of a group health insurance plan is based on the characteristics of each individual member of the group, including, but of course not limited to:

  • age
  • health status
  • occupational hazard
  • business and/or residential location
  • tobacco use

Employees of businesses that offer group health insurance are not compelled to join the plan, but the group must maintain a minimum number of insured (as few as 2 people, depending on the policy) to guarantee coverage. Remember, though, that an individual purchasing the same type and amount of coverage will pay less in a group than if that same person purchased it individually.

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No insurance company in any state can refuse to sell you small group health insurance provided they offer coverage to other small groups and you meet the state's minimum requirements concerning the type of organization you are insuring and the number of members in that group.

Get an idea of how much coverage for you and your employees will cost by filling a fast-and-free quote form with eHealthInsurance

The cost of small business health insurance

What about the bottom line, you ask? It is no more or less than simply this: group health insurance is less expensive than a bunch of individual policies. This is a fact. However, it still is not cheap. No health care in America is.

The employer will be required to pay some percentage of an employee's individual premium, which is often 25% or 50%, depending, again, on the state's laws and the insurance company. Also, if the employee wants to extend coverage to a spouse or dependent, the employer may choose to pay a percentage of that cost, but is not required to do so. You will likely have several policy and payment options from which you can choose.

Designing a small business health insurance plan

To get an accurate quote on a small business health insurance policy, you will need reliable information about both the type of coverage you seek and the vital statistics of the group members w ho want to be insured, including the number of dependents they would like to include.

Not having all this information on hand is not a problem as you will be asked only for estimates to shop for quotes. No price is set in stone until you sign your name to paper...everything is an estimate until then. Just keep in mind that the more accurate the information you provide, the more accurate the quote.

If you would like to see what a quote might look like, try eHealthInsurance, the web's largest health insurance marketplace. Their application process is relatively simple and quick, and they offer lots of help should you run into problems. Another time saver using eHealthInsurance affords you is the ability to save your insurance application and return to it and update it later, again and again as necessary. You can get both group quotes or individual quotes on this same site.


For more information about small business health insurance rights and regulations in your area, take a look at our state guides to group health insurance, or click over to .

Again, if you need to brush up on the basics ("What's a PPO?"), we have several in-depth guides to help you understand health coverage better, including an introduction to the basics of medical insurance and how to choose among many types of health plans, among others.


Next: Learn about the rules and protections applicable to small group insurance in your state by reading our guide to group insurance regulations in your state.

Want to learn even more?

Then subscribe to our free email course. You'll learn the simple step-by-step process that will help you locate, evaluate, and purchase the best possible health plan for you and your family. (Or your small business).

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