Do Small Businesses Have to Provide Health Insurance?

If you employ fewer than 50 people full-time, you are not required to offer health insurance to your employees. But more than half of firms that size do offer it, according to the National Federation of Independent Business. A 2022 U.S. Chamber of Commerce survey found that 88% of employees rank health insurance as the most important employer-provided benefit. If you have 50 or more employees and choose not to offer coverage that meets federal standards, you’ll be required to pay a penalty called a Shared Responsibility Payment instead.

How Much Does Small Business Health Insurance Cost?

Costs vary by location and the network and coverage you choose, but on average, small businesses contributed $7,349 per single covered employee in 2023. Experts recommend keeping your total employee benefit costs between 10% to 20% of your overall revenue.

What Is a Self-Insured Health Plan?

A self-insured health plan is a type of group health insurance in which the employer collects premiums and is responsible for paying claims when employees need care. These plans can be self-administered, or the business may work with an insurance provider to get stop-loss coverage (which puts a ceiling on your risk) and administrative support. There are several benefits to self-funded plans. Employers can keep surplus premiums (or receive a portion returned by the stop-loss carrier), plans can be customized to a greater degree, and certain ACA provisions that lead to high costs can be avoided. Increasingly, small businesses are opting for self-funded coverage. But self-insured plans aren’t right for every business.

Can an S Corp Pay for Health Insurance?

Yes. An S corp can provide health insurance for its employees. However, most health insurance companies require you to have at least two employees to get a group plan, so if you are an S corp owner and don’t have employees, you’ll need to get individual health insurance from the ACA Marketplace. Additionally, you can’t provide an HRA to anyone with a greater than 2% stake in your company.

Companies We Reviewed

We researched and reviewed multiple insurers to find the best options you see above on this list. These are the companies we researched to help you learn more before making a decision: Aetna, Ambetter (Sunshine Health), Anthem, Blue Cross Blue Shield, Cigna, Kaiser Permanente, Molina Healthcare, Oscar, United Healthcare.

We independently evaluate all recommended products and services. If you click on links we provide, we may receive compensation. Learn more.

Best Health Insurance Companies for Small Businesses for 2024

Lindsay Frankel

Updated April 16, 2024

Reviewed by

Anthony Battle

Fact checked by Fernando Flores

Blue Cross Blue Shield stands out as the best health insurance company for small businesses because of its range of coverage options. The company offers a nationwide preferred provider organization (PPO) network and extra benefits for employees, including an extensive discount program. Depending on your state, you may have a few options for finding health coverage for your employees, including through the Small Business Health Insurance Options Program (SHOP)—a government marketplace for small business health plans—and by purchasing a traditional group health plan from a broker or directly from an insurer. To choose the best health insurance companies for small businesses, we evaluated major health insurance carriers based on financial strength, customer satisfaction, coverage options, telehealth and wellness benefits, digital tools, and more. These are our top picks.

Best Health Insurance Companies for Small Businesses for 2024

Best Overall: Blue Cross Blue Shield
Best for Customer Satisfaction: Kaiser Permanente
Best for Part-Time and Seasonal Workers: UnitedHealthcare
Best for Self-Funded Plans: Aetna

Best Overall : Blue Cross Blue Shield

188betLiên kết đăng nhập — Blue Cross Blue Shield

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Why We Chose It

Blue Cross Blue Shield (BCBS) offers flexible options to small business owners, including the option to access the nation’s leading PPO network. In many states, BCBS employee plans come packed with extra benefits, and most plans include an extensive discount program.

Pros & Cons

Pros

Nationwide availability
Health and wellness discounts
Workplace wellness programs in many states

Cons

Poor J.D. Power ranking in some regions

Overview

Blue Cross Blue Shield, which is also our pick for the best health insurance company overall, offers employers many options. Among them are plans that include access to the BlueCard PPO network, which gives employees coverage when traveling nationwide. In some states, BCBS offers fully insured, level-funded, and self-funded plans. Blue Cross Blue Shield is a group of companies, so benefits and plans vary by region, but many member companies offer extra benefits.

For example, the member company Anthem provides an employee assistance program at no extra cost to help members manage stressful events, from legal issues to the search for care. In many states, BCBS plans also come with 24/7 telehealth and access to mobile app plan management. Most members also get access to Blue365, an extensive discount program that also offers a $25 gym membership in some states. BCBS and Anthem companies had a combined average of 3.5 stars out of 5 stars from the National Committee for Quality Assurance (NCQA), an independent body that judges insurance plans on the quality of their providers, as well as customer satisfaction. But customer satisfaction ratings vary by region. Check the 2023 J.D. Power to see how BCBS fared in your region. While rankings are poor in many regions, BCBS was top-ranked in Florida.

BCBS companies also have an A or A- financial strength rating from AM Best.

Best for Customer Satisfaction : Kaiser Permanente

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Why We Chose It

Kaiser Permanente has top customer satisfaction ratings from the NCQA and J.D. Power, along with an award-winning app and a suite of virtual care options.

Pros & Cons

Pros

4.2-star average NCQA rating
Top-ranked by J.D. Power in most regions where available
Administers HRAs, HSAs, and FSAs
Robust support for chronic conditions

Cons

Only available in eight states and D.C.

Overview

Kaiser Permanente has better customer satisfaction ratings than any of the major health insurance providers we reviewed, with a 4.2-star average NCQA rating and top J.D. Power rankings in four regions. The company offers employers many options. While Kaiser is known for its health maintenance organization (HMO) plans, it also offers preferred provider organization (PPO) plans. Employees can pair some plans with a Kaiser-administered health reimbursement arrangement (HRA), health savings account (HSA), or flexible spending account (FSA). Members can even submit HRA and FSA claims using their mobile phone cameras.

Free wellness coaching is included at no cost. Members who are at risk for chronic conditions are automatically enrolled in a disease management program with comprehensive support and remote patient monitoring. And Kaiser offers several additional employee benefits, including dental, vision, acupuncture, and chiropractic. Kaiser is also our top pick for the best digital tools, with an award-winning app, 24/7 virtual care, mental health apps, and online physical therapy. The main drawback is that Kaiser Permanente isn’t available everywhere. The company only offers plans in eight states and the District of Columbia. Kaiser does offer a SHOP (Small Business Health Options Program) plan in Georgia and Virginia.

Best for Part-Time and Seasonal Workers : UnitedHealthcare

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Why We Chose It

UnitedHealthcare offers small business plans nationwide, including a unique coverage solution for contractors, part-time workers, and seasonal employees.

Pros & Cons

Pros

Offers a unique program for non-benefit-eligible workers
Offers wellness resources and incentives
A+ financial strength rating from AM Best

Cons

J.D. Power ratings vary by region

Overview

UnitedHealthcare is our top pick for small businesses with several types of employees and contractors, including part-time and seasonal workers. Its FlexWork program offers coverage for non-benefit-eligible employees nationwide. The program provides group-premium-equivalent rates for three plan types designed for different types of workers, and you can add extra benefits like $0 telehealth, dental, and vision. UnitedHealthcare also offers members access to Self Care (a wellness app), fitness incentives, an online weight loss program, a smoking cessation program, and more. Plus, UnitedHealthcare offers a large provider network of more than 1.3 million healthcare providers. UnitedHealthcare also boasts an A+ financial strength rating from AM Best and a 3.5-star average NCQA rating. Though J.D. Power ratings vary by region, UnitedHealthcare was the top-scoring company in Texas and Virginia. The company also offers SHOP plans in Maryland, Massachusetts, New York, and D.C.

Best for Self-Funded Plans : Aetna

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Why We Chose It

Aetna is one of the few health insurance companies to offer self-insured plans tailored to small businesses. We also like that it offers virtual primary care and a CVS allowance.

Pros & Cons

Pros

Offers self-funded plans for up to 25% upfront savings
Offers a variety of health expense funds
Optional robust behavioral health benefits
Members of some plans can access affordable care at MinuteClinic locations

Cons

Fully insured group plans in some states don’t include MinuteClinic benefits

Overview

Self-funded plans from Aetna offer up to 25% savings upfront, plus stop-loss insurance if your claims for a particular month go over your maximum claims amount. When you renew your plan, Aetna will refund 50% of any surplus funding to you. Members get access to CVS Health virtual primary care plus up to a $100 allowance for health and wellness products at CVS. The company also offers HRAs, HSAs, FSAs, and retirement reimbursement arrangements (RRAs) in most states. In addition, you have the option of adding behavioral health benefits that include virtual counseling, mental health tools, and an employee assistance program. Many plans offer MinuteClinic benefits as well, but fully insured plans in some states are excluded.

Aetna has a 3.5-star average NCQA rating and a financial strength rating of A with AM Best. The company also came out on top in the East South Central, Northwest, and Southwest regions in the 2023 J.D. Power U.S. Commercial Health Plan Study, but ratings vary by region. Aetna offers SHOP plans in Maryland and D.C.

The Bottom Line

Blue Cross Blue Shield offers the most options for employers, with many plans providing access to the BlueCard PPO network and 24/7 telehealth, along with a variety of funding options in some states. If you’re looking for a self-funded plan, Aetna offers the best option tailored to small businesses in many states, as well as CVS benefits and optional robust behavioral health benefits. Kaiser Permanente takes the cake for customer satisfaction, with high third-party ratings and great digital tools, while UnitedHealthcare’s unique FlexWork program makes it our top pick for nontraditional employees.

Types of Health Insurance Companies for Small Businesses

You have a few options when choosing small business health insurance, according to Robert Slayton, owner of a Naperville, Illinois, employee benefits consulting firm called Robert Slayton & Associates.

Small Group Health Insurance

One option is to purchase a small group plan directly from a commercial health insurance company that serves small businesses or through a broker. “It gives the employer control over which plans to offer and [assurance] that people will remain covered while employed,” said Slayton. However, you may also need to offer COBRA or mini-COBRA plans. Mini-COBRA plans are required by some states for companies with fewer than 20 employees.

Self-Funded Plan

You may be able to save money by taking on the responsibility of paying out employee health claims yourself. This is known as a self-funded or self-insured plan, which typically relies on a commercial health insurer to administer the provider network and provide assistance with enrollment and claims processing.

Health Reimbursement Arrangement (HRA)

Another option is for the employer to offer a health reimbursement arrangement (HRA), which is an employer-funded group plan that pays employees back for qualified health expenses up to a certain dollar amount each year. Expenses may include premiums for an employer-sponsored plan, as well as copays and coinsurance.

There are several types of HRAs, including a qualified small employer HRA (QSEHRA) for companies with fewer than 50 full-time employees. Another type is an individual coverage HRA (ICHRA), which lets employees use the funds to buy their own health insurance with pretax dollars. Funds can also be used for copays and deductibles. “[Employers] choose an amount to give each employee so that the employee can purchase coverage on their own,” said Slayton. “Employees who claim this reimbursement must have an underlying individual plan or Medicare.”

SHOP Plan

The Small Business Health Insurance Options Program allows you to compare small business plans offered on the ACA Marketplace and offer one or multiple options to your employees. These plans are typically the only route to the Small Business Health Care Tax Credit. However, they’re only offered on the federal marketplace in eight states and on state-run exchanges in 13 states.

Why You Should Trust Us

Investopedia analyzed health insurance providers on 27 criteria. We gathered data from state and federal insurance marketplace databases and websites as well as from the National Committee for Quality Assurance, which independently rates healthcare plans. We used this data to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best health insurance companies for small businesses since 2020.

Frequently Asked Questions

Do Small Businesses Have to Provide Health Insurance?

If you employ fewer than 50 people full-time, you are not required to offer health insurance to your employees. But more than half of firms that size do offer it, according to the National Federation of Independent Business. A 2022 U.S. Chamber of Commerce survey found that 88% of employees rank health insurance as the most important employer-provided benefit. If you have 50 or more employees and choose not to offer coverage that meets federal standards, you’ll be required to pay a penalty called a Shared Responsibility Payment instead.
How Much Does Small Business Health Insurance Cost?

Costs vary by location and the network and coverage you choose, but on average, small businesses contributed $7,349 per single covered employee in 2023. Experts recommend keeping your total employee benefit costs between 10% to 20% of your overall revenue.
What Is a Self-Insured Health Plan?

A self-insured health plan is a type of group health insurance in which the employer collects premiums and is responsible for paying claims when employees need care. These plans can be self-administered, or the business may work with an insurance provider to get stop-loss coverage (which puts a ceiling on your risk) and administrative support. There are several benefits to self-funded plans. Employers can keep surplus premiums (or receive a portion returned by the stop-loss carrier), plans can be customized to a greater degree, and certain ACA provisions that lead to high costs can be avoided. Increasingly, small businesses are opting for self-funded coverage. But self-insured plans aren’t right for every business.
Can an S Corp Pay for Health Insurance?

Yes. An S corp can provide health insurance for its employees. However, most health insurance companies require you to have at least two employees to get a group plan, so if you are an S corp owner and don’t have employees, you’ll need to get individual health insurance from the ACA Marketplace. Additionally, you can’t provide an HRA to anyone with a greater than 2% stake in your company.
Companies We Reviewed

We researched and reviewed multiple insurers to find the best options you see above on this list. These are the companies we researched to help you learn more before making a decision: Aetna, Ambetter (Sunshine Health), Anthem, Blue Cross Blue Shield, Cigna, Kaiser Permanente, Molina Healthcare, Oscar, United Healthcare.

How We Chose the Best Health Insurance Companies for Small Businesses

We chose the best health insurance companies for small businesses by looking at our research for our list of the overall best health insurance companies and then investigating what options these insurers offer for small businesses looking to buy plans for their employees.

To identify which health insurance companies to review for our overall winners list, we analyzed business and market insight databases, considered health insurance company market share, and researched user-generated data from Google to determine public interest and trends in health insurance companies and plans. We collected data from the National Committee for Quality Assurance (NCQA), an independent organization that rates healthcare plans on quality and patient satisfaction. We also gathered data from state and federal government insurance marketplace websites and databases, and directly from companies via websites, media contacts, and existing partnerships. The data collection process took place between Sept. 29 and Oct. 23, 2023. We then developed a quantitative model that scores each health insurance provider based on 27 criteria that fall into four major categories and are crucial in evaluating the company’s offerings and benefits. We weighted the four categories as follows for this article:

Plan Quality & Customer Satisfaction: 20%
Plan Features: 40%
Cost: 25%
Availability: 15%

Read our full methodology for reviewing health insurance companies.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.