Health Insurance For One Employee: Options, Costs, & How To Offer It

Health insurance for a small business with one employee can be complicated.

While businesses with fewer than 50 employees aren’t required to offer coverage, doing so can provide tax benefits and help attract talent.

In this guide, we’ll break down how to choose the right plan.

What Is Small Business Health Insurance?

Small business health insurance is coverage that helps pay for employees’ medical care, including routine visits, emergencies, and more.

Plans vary based on factors like deductibles, copays, and provider networks.

Is Health Insurance Legally Required?

Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees are generally required to offer health insurance.

If you have fewer employees — such as a business with just one employee — offering coverage is optional.

However, small businesses that provide health insurance may qualify for tax credits. To be eligible, businesses typically must:

• Have fewer than 25 full-time equivalent employees
• Pay at least 50% of employee premiums
• Offer coverage through the Small Business Health Options Program (SHOP) marketplace

Can You Have Health Insurance For One Employee?

Small businesses can offer health insurance even if they have only one employee.

To qualify for traditional group coverage, the employee must generally be a true W-2 employee who is not the owner, spouse, or an independent contractor.

If you don’t have a qualifying employee, group health insurance typically isn’t an option. However, you still have alternatives, including:

• Individual or family health insurance plans
• Health reimbursement arrangements (HRAs)
• Health savings accounts (HSAs)

These options can help cover medical expenses and may offer tax advantages for both the business and the employee.

How To Enroll In Group Health Insurance With One Employee

Enrolling in group health insurance with one employee is possible, but there are a few requirements.

Most insurers require at least two people to qualify for a group plan, but the business owner typically counts as one. Once you hire your first eligible employee, you can usually apply for group coverage.

To get started, you can explore plans through SHOP, which helps small businesses compare and enroll in coverage.

You can enroll directly through your state’s marketplace or work with a broker to find and set up the right plan.

The Benefits Of Group Health Insurance

Group health insurance can offer several advantages for small businesses, even with just one employee:

• Tax advantages: You may qualify for small business tax credits if you meet eligibility requirements.
• Lower costs per person: Premiums are often more affordable than individual plans as you add employees.
• Flexible coverage options: Access to a range of plans, providers, and customizable deductibles and copays.

How To Enroll In Group Health Insurance

Enrolling in a group health insurance plan involves a few key steps:

• Set your budget: Determine how much your business can contribute and what employees may need to pay.
• Define your coverage needs: Decide on plan features, such as deductibles, copays, and whether to include extras like dental or vision.
• Gather your information: Be ready with business details (name, address, tax ID) and basic employee information.
• Shop for plans: Compare options through the SHOP marketplace, insurers, brokers, or a professional employer organization (PEO).
• Compare quotes and choose a plan: Review costs, coverage, and provider networks to find the best fit.

You can also use HealthCare.gov to compare plan ratings and availability in your area.

How Much Does Small Business Health Insurance Cost For One Employee?

The cost of health insurance is a key consideration for small business owners.

Pricing depends on several factors, including the type of plan, provider, location, and the ages of you and your employee.

For reference, the average monthly premium for an Affordable Care Act (ACA) plan without subsidies is about $438, though your costs may vary.

If traditional plans are too expensive, alternatives like health reimbursement arrangements (HRAs) or health savings accounts (HSAs) may offer more flexible, cost-effective options.

The Bottom Line On Health Insurance For One Employee

The cost of health insurance is a key consideration for small business owners.

Pricing depends on several factors, including the type of plan, provider, location, and the ages of you and your employee.

For reference, the average monthly premium for an ACA plan without subsidies is about $450 to $550, though costs vary widely based on location, age, and plan type.

If traditional plans are too expensive, alternatives like health reimbursement arrangements (HRAs) or health savings accounts (HSAs) may offer more flexible, cost-effective options.

If you’re ready to start shopping your options, check out our list of the best health insurance for small businesses.