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Small business health insurance: how group plans work
Who qualifies, the rules carriers set, what moves your price, and the tax breaks you can claim. Written for owners and office managers, not insurance people.
What counts as a small group
The Affordable Care Act sorts employers into small group and large group markets. In most states, small group means 1 to 50 employees. California, Colorado, New York and Vermont set the line at 100.
To buy a group plan at all, you need at least one employee who is not an owner or an owner's spouse. A business made up only of owners usually buys individual coverage instead.
Small group plans follow ACA rules. Carriers must accept your business, cover the ten benefit categories the ACA requires, and price plans without looking at anyone's health. That protection is the biggest reason small employers buy fully insured plans.
The two rules carriers check
Carriers add their own requirements on top of federal law. Most come down to two numbers:
- Participation. Many carriers want around 70% of eligible employees to enroll. Employees who decline because they have coverage elsewhere, such as a spouse's plan, usually do not count against you.
- Contribution. Many carriers want the employer to pay at least half of the employee-only premium. You can choose to pay more, and you can choose whether to help with family coverage.
Miss either rule and you can still enroll, but only during the yearly window from November 15 to December 15.
What drives your price
ACA small group pricing can use only four things:
- Age. Older employees cost more, up to three times the rate of a young adult.
- Location. Each state is split into rating areas, and prices change between them.
- Tobacco use. Carriers can charge tobacco users more, within limits set by federal and state law.
- Who is covered. Employee only, employee plus spouse, employee plus children, or family.
The plan you pick matters just as much. Bronze, silver, gold and platinum tiers trade a lower premium for higher deductibles and copays. Network type matters too: HMO and EPO plans usually cost less than PPO plans because they limit you to a set list of doctors.
What employers pay
KFF's 2025 Employer Health Benefits Survey puts the average yearly premium at $9,325 for single coverage and $26,993 for family coverage. Workers paid an average of $1,440 toward single coverage and $6,850 toward family coverage. At firms with 10 to 199 workers, the average worker share of a family premium was $8,889, well above what workers at larger firms pay.
Source: KFF, 2025 Employer Health Benefits Survey, released October 22, 2025.
What 2027 renewals look like
Every year, carriers file the rate changes they want for the next plan year. For 2027, the filings we track show most carriers asking for double-digit increases.
These are averages across a carrier's whole small group book. Your own renewal can land higher or lower depending on your plan, your team's ages and your location. That spread is why it pays to compare before you accept a renewal.
Plan to start shopping 60 to 90 days before your renewal date. That leaves time to compare, collect employee choices and file paperwork.
Kansas
| Carrier | Avg. change | Range |
|---|---|---|
| Blue Cross and Blue Shield of Kansas City | +13.39% | 8.52% to 22.81% |
| UnitedHealthcare | +11.47% | 6.43% to 15.27% |
| Blue Cross and Blue Shield of Kansas | +9.61% | 5.52% to 11.92% |
Requested by carriers, not yet final. As of September 20, 2026. Source: CMS Rate Review, Kansas small group, plan year 2027.
Missouri
| Carrier | Avg. change | Range |
|---|---|---|
| UnitedHealthcare | +17.23% | 10.94% to 19.43% |
| Blue Cross and Blue Shield of Kansas City | +15.58% | 10.61% to 27.6% |
| Anthem Blue Cross and Blue Shield | +14.56% | 9.41% to 17.36% |
| Medica | +12.61% | 8.87% to 13.25% |
Proposed, finals due October 31, 2026. As of July 31, 2026. Source: Missouri DCI, 2027 proposed rate filings.
Tax breaks for small employers
The premiums you pay for employees are a deductible business expense. Employees can pay their share before taxes through a Section 125 premium-only plan, which lowers payroll taxes for both of you.
Very small employers may also qualify for the Small Business Health Care Tax Credit. The IRS rules require you to:
- Have fewer than 25 full-time equivalent employees
- Pay average wages below a limit the IRS adjusts each year
- Pay at least 50% of employee-only premiums
- Buy coverage through the SHOP Marketplace
The credit covers up to 50% of the premiums you pay, or 35% for tax-exempt employers, and you can claim it for two years in a row. You file it on IRS Form 8941. Check the current wage limit with your tax preparer.
When you have to offer coverage
The federal employer mandate applies only to applicable large employers: businesses with 50 or more full-time employees, counting full-time equivalents. They must offer affordable coverage that meets minimum value to at least 95% of full-time staff or risk a penalty.
Below 50, offering coverage is your choice. Many small businesses offer it anyway because good candidates ask about it first.
Options beyond a traditional group plan
A fully insured group plan is the most common choice, but not the only one.
- Level-funded plans charge a steady monthly amount that covers expected claims, admin costs and stop-loss insurance. Healthier groups can pay less, and some plans refund part of any surplus. Expect a health questionnaire.
- ICHRA lets you reimburse employees, tax free, for individual plans they choose. You set the budget; they pick the plan. Read how ICHRA works.
- QSEHRA is a simpler reimbursement plan for businesses under 50 employees that do not offer a group plan.
Rules on level-funded plans vary by state, and a few states restrict them for very small groups. We can tell you what is available where you are.
Common questions
Can I buy a group plan if I am the only employee?
No. A group plan needs at least one employee who is not an owner or an owner's spouse. Owner-only businesses usually buy an individual plan instead.
Can I enroll in a small group plan any time of year?
Yes, if you meet the carrier's participation and contribution rules. If you fall short of them, federal rules still let you enroll during a yearly window from November 15 to December 15.
Can a carrier charge more because an employee is sick?
Not in an ACA small group plan. Prices can vary only by age, location, tobacco use and who is covered. Level-funded plans are different: they often price from a health questionnaire.
How long can new hires wait before coverage starts?
Federal law caps the waiting period at 90 days. Many small employers start coverage on the first of the month after hire or after 30 days.
Do I have to offer COBRA?
Federal COBRA applies to employers with 20 or more employees. Many states have their own continuation laws for smaller groups, and your carrier usually handles the details.
Get your quote before renewal
Tell us about your team. We will compare plans from the carriers in your state and send you options.
- Free, with no obligation to buy
- Small group, level-funded and ICHRA options compared
- A licensed agent on our team handles your request