2024 Complete Guide to Small Business Healthcare Plans

Everything you need to know about creating an affordable health benefit for businesses with less than 30 employees – including HRAs, health sharing plans, HSAs, and Direct Primary Care plans.

By Wiley Long III, President – HSA for America
Reviewed by Lou Spatafore
Fact checked by Misty Berryman – Updated 1/2/2024


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How to Choose the Best Healthcare Plan for Your Small Business

Choosing a health insurance option for your employees can seem like a daunting task. Before you begin, ask yourself the following questions:


What options is your company eligible to offer?

How much are you willing to spend on health benefits?

How much time do you have to manage and administer benefits?

Which benefit options would be of highest value to your employees?

Four Steps to Getting Healthcare Plans for Your Small Business

If you’re looking for the best ways to provide health benefits to 2 to 49 employees, this step-by-step primer breaks everything down into easy-to-understand terms.

Step One: Review Your Budget

Many small businesses forgo health benefits because of the high price. But there are some options like HRAs and health sharing that fit even the smallest company’s budget.

The first thing you need to determine is how much you are willing to contribute for health benefits.

Step Two: Consider Your Employee’s Annual Income

The amount of money your employees are currently making may affect the affordability of their healthcare. For example, some HRAs are not compatible with the ACA subsidy, which could force your employees to have to choose one or the other.

Knowing how much your team is currently making will help your advisor find the right option for everyone.

Step Three: Consider Your Employee’s Coverage Needs

It’s always a good idea to talk to your employees about their health needs before purchasing a plan. Try to get a feel for how often they use their coverage, and whether or not the benefit you’re thinking about would help them pay for their healthcare.

Step Four: Talk to Your Personal Advisor About Small Group Insurance

Unlike traditional insurance, employee health benefits do not need to be “one-size-fits-all”. With HRAs, HSAs, and health sharing, it’s possible to create a flexible benefits package that encourages the employee to take ownership of their health decisions.

In addition, it’s possible to build different combinations of these benefits for added convenience. For example, pairing a health-sharing plan with an employee’s HSA is a great way to offer balanced coverage without spending too much.


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Complete Guide to Small Business Healthcare Plans

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Explore this step-by-step report backed by the knowledge and experience of our in-house small group insurance experts.

Small Business Healthcare Plan Options

These are the five strategies we most often recommend to our small business clients.

Option One: Employees Obtain Their Own Coverage

If your business has fewer than 50 employees, then you are not required to offer access to health insurance. But as many small business owners can tell you, it can be difficult to grow a young company without a competitive benefits package.

On the other hand, sometimes the smarter financial move is to not offer health benefits. For example, some low-income employees might qualify for an ACA subsidy on the individual market, making it the cheaper option. Or perhaps some of your employees are already covered by a spouse’s group plan.

As you’ll find out in this guide, health insurance for small businesses is more affordable than you think. It also creates access to a number of valuable tax benefits for employer and employee alike.


It’s easier than choosing and administering a health benefit.

Your employees might already be covered, or eligible for a cheaper plan with an ACA tax credit.


Offering no health benefits can make it hard to attract new talent.

Wage increases (as opposed to some benefit offers) are taxable to the employee.

Option Two: Small Group Health Insurance

With small group health insurance, the employer chooses a policy plan and then pays a fixed premium for every enrolled employee. The employee pays their share from their paycheck, and is covered as long as they are employed.

It works just like a plan purchased on the individual market, only far more affordable in some cases.

Some group plans are also HSA-qualified. This means that you can offer an additional tax-free benefit in the form of a health savings account (HSA).

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Employer and employee contributions are both tax-deductible.

Offering health insurance can reduce turnover, increase productivity, and attract new talent to your company.

Businesses with fewer than 25 employees may be eligible for a big tax credit worth up to 50% of total plan contributions.


Offering no health benefits can make it hard to attract new talent.

Wage increases (as opposed to some benefit offers) are taxable to the employee.

Option Three: HRAs for Small Business

Health reimbursement arrangements, or HRAs, are a common benefit option for businesses with fewer than 30 employees. Small business HRAs let employers compensate their workers for their own individual health plans, as a tax-free benefit.

In most cases, reimbursements are used for plan premiums. However, they can also be used for eyeglasses, dental insurance, and other out-of-pocket costs. 

HRAs are popular with small companies because they are highly flexible. The employer can choose how much to contribute each month, without having to worry about unexpected fluctuations in cost.

HRAs are popular with employees because they allow the individual to choose a plan of their own, as opposed to being pigeonholed into a plan that isn’t a good fit.

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Employers choose how much to contribute (there are no contribution minimums)

Employers can set the rules of their own HRA, making them very flexible

Employees get to choose their own plan, and take it with them if they are no longer employed with the company


HRAs require the employee to have their own individual coverage

Most HRAs are incompatible with the ACA subsidy, meaning some employees may have to choose between the two

Option Four: Health Sharing Plans for Employees

For businesses and employees alike, health sharing for employees can save a bundle on monthly premiums. In fact, the average health sharing plan is about half the cost of unsubsidized health insurance.

Health care sharing is not actually health insurance at all. Instead, it is a membership-based cost sharing program. In exchange for a monthly contribution, members can have their medical expenses shared according to a fixed-price reimbursement model.

But like any health care strategy, health sharing isn’t for everyone. These plans come with waiting periods for pre-existing conditions, and coverage is usually less comprehensive.

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Health sharing is one of the most affordable benefit options available

Health sharing is a unique benefit opportunity only available to small employers


Health sharing is not ideal for individuals with significant medical needs

Health sharing contributions are not tax-deductible

Option Five: Direct Primary Care

Direct Primary Care, or DPC, is an alternative healthcare model where patients or their employers pay a flat monthly or annual membership fee in exchange for unrestricted access to a primary care doctor.

When offered as an employee benefit, workers can see their primary care provider as often as needed for preventative care and maintenance of chronic conditions. Their PCP can refer them to specialists for more advanced care, as needed. There are no co-pays, co-insurance, or other out-of-pocket costs.

DPC works best in conjunction with a high-deductible health insurance plan or health sharing plan, each of which may help with costs for emergency or acute care or specialist care beyond the scope of the PCP’s practice.

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Employees and their families can get more time with doctors

Reduced costs to employers and workers


DPC plans don’t cover ER visits

DPC does not cover prescription drugs. However, standalone plans are available, or the company HDHP or health sharing plan may assist with drug costs.

Find the perfect Healthshare Plan for your medical coverage today with HSA for America.

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