how does a small business get health insurance for employees

Let’s be real for a minute.

Running a small business is tough. You wear ten different hats every day. And now, you’re thinking about Health Insurance.

Maybe you have a rockstar employee you’re scared of losing. Maybe you just want to sleep better at night knowing your team is covered.
But then you start Googling, and it’s a nightmare. Deductibles? PEOs? Tax credits? It feels like you need a law degree just to understand the prices.

Here is the good news: It’s actually not that hard.
You don’t need to be Apple or Amazon to offer good benefits. Even if you only have two employees, you can do this without going broke.

This isn’t a textbook. It’s a cheat sheet. I’m going to show you exactly how to get it done, step by step.

how does a small business get health insurance for employees — How does a small business get health insurance for employees

Is It Even Worth It?

Before we talk about how to buy it, let’s talk about why. Because let’s face it—it’s expensive.

1. The “Please Don’t Quit” Strategy
Hiring is awful right now. If you find someone who shows up and does the work, you need to keep them.
Health insurance is the best way to do that. If your employee has kids, they need insurance. If you provide it, they are way less likely to jump ship for a corporate job.

2. The Government Helps You
This is the part business owners forget. The money you spend on employee insurance is 100% tax-deductible.
It lowers your tax bill at the end of the year. Plus, if you’re small enough, you might even get tax credits—which is basically free cash from the IRS.

3. It Just Makes Sense
When people can afford to go to the doctor, they get sick less often. A healthy team works harder. It’s that simple.

How Do You Actually Buy It?

You basically have three options. Think of them like doors.

Door #1: The Government Shop (SHOP)
This stands for “Small Business Health Options Program.” It’s like Amazon, but for health plans.

Why pick this? This is the only place where you can get the Tax Credit. If you have fewer than 25 employees and don’t pay huge salaries, the government might pay up to 50% of your costs. That is huge savings.

Door #2: Call a Broker (The Easy Way)
You don’t have to use the government site. You can just call a local insurance broker.

Why pick this? Brokers know the market. They might find you a plan with better doctors or lower deductibles than what you see online.

Door #3: The “Here’s Some Cash” Method (QSEHRA)
This is getting super popular. Instead of picking a plan, you just give your employees a budget.

How it works: You say, “I’ll give everyone $300 a month for health insurance.”
They do the work: They buy their own plan. They show you the receipt. You pay them back tax-free.
Why pick this? Zero headache for you. You don’t have to manage a policy; you just manage the cash.

The Money Question: Can I Afford This?

This is the big one, right?
Here is the secret: You don’t have to pay for the whole thing.

Most insurance companies use the 50% Rule.
You have to pay at least 50% of the employee’s monthly bill. The employee pays the other half out of their paycheck.

Let’s do the math:

A plan costs $400/month.
You pay $200.
The employee pays $200.

If you have 3 employees, your total cost is about $600 a month.
That’s manageable, right?

What about their families?
You usually offer coverage to their spouses and kids, but you don’t have to pay for them. Most small businesses pay 50% for the employee and 0% for the family.

Your To-Do List (Start Today)

Ready to go? Here is exactly what you need to do.

Step 1: Count Your People
Who is full-time? Usually, anyone working 30+ hours a week counts. You generally can’t pick and choose—if you offer it to one full-timer, you have to offer it to all of them.

Step 2: Set Your Budget
Look at your bank account. Can you afford 50%? Do you want to be nice and pay 80%? Pick a number you can stick to.

Step 3: Call a Broker (Seriously, do this)
This is my #1 piece of advice. Don’t do this alone.
Find a local health insurance broker.

The best part: They don’t charge you. The insurance company pays them. It costs you zero dollars to have an expert do the paperwork for you.

Step 4: Pick a Plan
Your broker will show you options.

Bronze: Cheap monthly payments, but high costs when you see a doctor.
Silver: The middle ground. Most small businesses pick this.
Gold/Platinum: Expensive, but great coverage.

Step 5: Sign the Papers
Hold a meeting. Hand out the forms. Once everyone signs, send it back to the broker. Boom. You’re insured.

Don’t Make These Mistakes

I see business owners mess this up all the time. Don’t be one of them.

The “Handshake” Deal: Do not just write a personal check to your employee for their insurance. If you don’t set it up formally, the IRS will tax it as income. Use a formal plan or a QSEHRA.
Waiting Too Long: Insurance doesn’t work backwards. You can’t buy it today to cover the accident from yesterday. Set it up before you need it.
Ignoring the Network: A cheap plan is useless if the only doctor who takes it is 50 miles away. Check the network before you sign.

What If It’s Just Me? (Solopreneurs)

If it’s just you (or you and your spouse), you technically can’t get a “Group Plan” in most states. You need at least one employee who isn’t related to you.

The Fix:
Go to Healthcare.gov and buy an Individual Plan. Since you are self-employed, you can still deduct the premiums on your taxes. You still get the tax break; you just buy a different policy.

Final Thoughts

Getting insurance feels like climbing a mountain, but it’s really just a small hill.

It keeps your team happy.
The government helps pay for it.
A broker does the work for free.

Don’t let the paperwork scare you. Call a broker today and say, “I run a small business, and I need quotes.” That one call could save you a massive headache later.

You got this.

Quick FAQ

Can I offer insurance if I only have 1 employee?
Yes! As long as that employee isn’t your spouse, you can usually start a group plan.

Do I have to pay for dental too?
Nope. Medical is the big one. Dental and vision are extras. They are cheap, but you don’t have to offer them.

Do I have to wait for January?
No. A business can start a planat any time of the year. You can start next month if you want.

What if an employee says no?
That’s fine. They just sign a waiver saying they have coverage elsewhere (like through a spouse). You don’t have to pay for them if they don’t take it.

Will my rates go up if my employee is sick?
Generally, no. Modern laws say small group plans can’t charge you more just because someone has a health condition. The price is based on age and location, not health history.

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Disclaimer

I’m a writer, not an insurance agent. Rules change by state. Always chat with a professional broker to get the exact details for your business