💳 Save money on credit card processing with one of our top 5 picks for 2026
Health insurance for small businesses doesn’t have to be complicated. Learn about your options and how to choose the right plan.
WRITTEN & RESEARCHED BY
Editor & Senior Staff Writer
UPDATED
Do small businesses need to offer health insurance? And if not, is it still worth it?
In this guide, we’ll explain when coverage is required, how much it costs, and how to choose the right plan for your business.
Table of Contents
Small business health insurance is group coverage that helps pay for employees’ medical expenses, including routine care, emergencies, and preventative services.
It’s designed for smaller organizations that may not have dedicated HR teams to manage benefits.
Even when not legally required, offering health insurance can help attract and retain employees.
Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees are generally required to offer health insurance.
Smaller businesses are not required to provide coverage, but many choose to offer it as a competitive benefit.
Health insurance shares the cost of medical care between the insurer and the insured. The exact costs depend on the plan you choose.
Key terms to understand:
| Term | Definition |
|---|---|
| Deductible | What you pay before insurance starts covering costs |
| Copay | A fixed fee for services (e.g., doctor visits) |
| Coinsurance | Your share of costs after meeting your deductible |
| Out-of-pocket maximum | The most you’ll pay in a year before insurance covers 100% |
| Provider network | Doctors and facilities that accept your insurance |
Different plan structures can significantly affect how much you and your employees pay for care.
Even if you’re not required to offer health insurance, it can provide meaningful benefits for your business.
Key advantages include:
When comparing health insurance plans, the key differences come down to cost, flexibility, and provider access.
| Plan Type | Key Features | Best For |
|---|---|---|
| HMO | Lower cost, must use in-network providers, requires referrals | Employees who want predictable costs and don’t need many specialists |
| PPO | Higher cost, flexible provider choice, no referrals required | Employees who want flexibility and access to specialists |
| EPO | In-network only, no referrals required, lower cost than PPO | Employees who want lower costs but some flexibility |
| POS | Requires referrals, allows out-of-network at higher cost | Employees who want a balance of cost and flexibility |
| HSA / HRA | Pre-tax savings for medical expenses, often paired with high-deductible plans | Employees with low expected medical needs |
| QSEHRA | Employer reimburses employees for individual plans | Small businesses offering flexible, non-group coverage |
Choosing the right health insurance comes down to balancing cost, coverage, and employee needs.
Start by deciding how much your business can contribute to premiums and what level of coverage makes sense for your team.
Key factors to consider include:
Also, ask yourself:
When evaluating plans, look at:
You can compare plans and ratings through HealthCare.gov or work with a broker to review options and get quotes.
Once you know what coverage you need, the next step is to explore your options. Small businesses have several ways to find insurance:
| Option | How It Works | Best For |
|---|---|---|
| SHOP Marketplace | Government-run exchange for businesses with fewer than 50 employees | Businesses seeking standardized plans and potential tax credits |
| Online Insurance Providers | Purchase plans directly from insurers or marketplaces | Businesses that want to compare plans independently |
| Private Exchanges (Purchase Alliances) | Employers contribute a set amount; employees choose from available plans | Businesses offering flexible plan choices |
| Professional Employer Organization (PEO) | Outsources HR, including benefits and insurance management | Growing businesses that want to reduce administrative work |
| Insurance Broker | Expert helps compare plans and negotiate coverage | Businesses that want guidance and personalized recommendations |
Buying health insurance for your small business doesn’t have to be complicated. Follow these five steps to get started:
Determine how much your business can contribute and what employees may need to pay.
Decide what type of plan fits your needs, including coverage levels, provider networks, and optional benefits like dental or vision.
Prepare basic details such as your business address, number of employees, and employee demographics.
Explore options through SHOP, insurers, brokers, or PEOs. Compare providers based on cost, coverage, and service quality.
Review plan details carefully and choose the option that offers the best balance of cost and coverage for your business and employees.
Health insurance can be one of the most valuable benefits you offer as a small business owner. While it’s not always required, the right coverage can help you attract employees, manage risk, and support a healthier, more productive team.
With so many plan types, costs, and providers to consider, the key is finding a solution that fits both your budget and your employees’ needs.
If you’re ready to take the next step, check out our list of the best small business health insurance providers to compare options and find the right plan for your business.
Want to help shape the future of the Merchant Maverick website? Join our testing and survey community!
By providing feedback on how we can improve, you can earn gift cards and get early access to new features.
Experience competitive rates, excellent customer support, and a fast & easy claim process. Request a free analysis today.
Get Started
Help us to improve by providing some feedback on your experience today.
The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.
Experience competitive rates, excellent customer support, and a fast & easy claim process. Request a free analysis today.
Get Started
