Can a business with one or two employees get group health insurance?

Yes. In most states you can buy small-group coverage with as few as one enrolled employee, though some carriers set the floor at two. You do not need a large team to access group plans — small-group serves businesses with 1 to 50 employees.

Small business employee benefits: what to offer & what it costs

Q: Do small businesses have to offer health insurance?

No. Under the Affordable Care Act, employers are only required to offer health coverage once they reach 50 full-time-equivalent employees. Below that, offering health insurance is a choice you make to compete for talent, not a legal obligation. You are still responsible for payroll taxes (Social Security and Medicare), unemployment insurance, and — in most states — workers' compensation.

Q: How much does small business health insurance cost per employee?

In 2026, employers commonly budget roughly $700 to $850 per month for an individual employee's plan and $1,800 to $2,200+ per month for family coverage, before any cost-sharing with the employee. Most small employers cover 70 to 80 percent of the employee-only premium and less toward dependents. Cost depends on the ages of your group, your state, and the plan tier.

Q: Are small business health insurance premiums tax-deductible?

Generally yes. Employer contributions toward employee health premiums are a deductible business expense and are not counted as taxable income to the employee. Businesses with fewer than 25 full-time-equivalent employees and below-threshold average wages may also qualify for the Small Business Health Care Tax Credit. Confirm specifics with your CPA — we are not licensed accountants.

Hiring your first few people changes the math on benefits. Here's what you're actually required to offer, what it really costs, and how to build a package that competes — written for owners, not benefits committees.

Do small businesses have to offer health insurance?

No. Under the Affordable Care Act, you are only required to offer health coverage once you hit 50 full-time-equivalent employees. Below that line, health insurance is a choice you make to compete for talent — not a legal obligation. What you do owe regardless of size: payroll taxes (Social Security and Medicare), unemployment insurance, and, in most states, workers' compensation. A handful of states layer on their own rules — paid sick leave, disability, retirement-plan access — so check your state alongside the federal floor.

How much does small business health insurance cost per employee?

Plan on roughly $700 to $850 per month for an individual employee's plan and $1,800 to $2,200+ for family coverage, before you and the employee split the bill. Most small employers cover 70 to 80 percent of the employee-only premium and less toward dependents. The real number moves with the ages of your group, your state, and the plan tier you pick. On a small group, carriers quote you a composite rate — one blended price per tier across the group — which makes your monthly cost easy to budget instead of re-pricing every employee individually.

Can a business with one or two employees get group coverage?

Yes. In most states you can write small-group coverage with as few as one enrolled employee — some carriers set the floor at two. This is the single biggest misconception we hear from new owners. You do not need a big team to access group plans; small-group is built for businesses with 1 to 50 employees. If a traditional group plan doesn't pencil out at your size, an individual-coverage reimbursement model (below) is often the smarter route.

What does an off-exchange small-group plan get you?

An off-exchange plan is a major-medical group plan placed directly through a carrier or broker, outside the Healthcare.gov interface. Same underwriting, same regulators — and often a broader provider network. Through TMRW that means carriers like Cigna, BCBS/Anthem, PHCS, and QualCare, with a real broker servicing the account year-round instead of a 1-800 number at renewal.

Here's the honest tradeoff: off-exchange plans don't carry premium tax credits. If every one of your employees would personally qualify for large subsidies on the individual market, the math can favor a reimbursement model instead — and a good broker will tell you that rather than talk you into a group plan you don't need.

"The right package isn't the biggest one. It's the one your people actually value, priced so you can keep offering it next year."

Should I just reimburse employees instead (ICHRA)?

Sometimes — and it's worth pricing both. An Individual Coverage HRA lets you give employees a tax-free monthly allowance to buy their own coverage, instead of you sponsoring one group plan. You set a predictable budget; they pick the plan that fits them. It tends to win when your team is spread across states, ages vary widely, or several employees qualify for subsidies. It tends to lose when you want one plan with a strong shared network and the simplicity of a single renewal. We wrote a full plain-English breakdown of ICHRA if you want the deeper version.

Are the premiums tax-deductible?

Generally, yes. Employer contributions toward employee health premiums are a deductible business expense, and they aren't counted as taxable income to the employee. On top of that, businesses with fewer than 25 full-time-equivalent employees and below-threshold average wages may qualify for the Small Business Health Care Tax Credit, worth a meaningful slice of premiums paid. One caveat we always add: confirm the specifics with your CPA — we are not licensed accountants, and the credit has real eligibility fine print.

What benefits matter beyond health insurance?

After medical, the things that move hiring decisions most are ancillary coverage, retirement access, and time off. You don't need a Fortune 500 menu — a focused package beats a long, thin one:

Ancillary (dental and vision): cheap to add, highly valued. Through carriers like Delta Dental, MetLife, and VSP, these come with no waiting periods — employees can use them day one. Retirement: state-facilitated IRA programs and low-cost 401(k) providers make this affordable even for tiny teams. Time off and flexibility: a clear, generous PTO policy and remote/hybrid options cost little and consistently rank near the top of what candidates want.

How do I build a competitive package without overpaying?

Start with a defined budget per employee, lead with one or two benefits your people actually value, and let a broker shop the carriers for you. Three moves do most of the work: define your contribution (so your cost is predictable instead of open-ended), claim every credit and deduction you qualify for, and work with someone who places small groups every day and isn't paid more to sell you a richer plan than you need. That's the whole game — structure first, spend second.

Small business employee benefits, without the HR-department jargon.