2024 Complete Guide to Small Business Healthcare Plans

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.

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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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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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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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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