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Small Business Health Insurance - Costs, Benefits, & Options for 2024

By: Jack Nicholaisen author image
Business Initiative

As a small business owner, offering health insurance to your employees can be a game-changer.

Not only does it improve employee satisfaction and retention, but it can also lead to better overall health outcomes for your staff.

In an increasingly competitive labor market, it’s essential to understand the average cost of health insurance for small business owners and the various options available to provide this benefit.

In this article, we’ll explore the factors that determine the costs, the benefits of offering health insurance, and how small businesses can provide coverage to their employees.

Factors Influencing the Average Cost of Small Business Health Insurance

According to a 2021 KFF study, the national average premium for small group health insurance was $651 per month for single coverage and $1,817 for family coverage.

However, these figures can vary significantly depending on the factors mentioned above.

The average cost of health insurance for small business owners can vary widely depending on several factors, including:

  • Company size:

Generally, the more employees you have, the higher the cost of providing health insurance.

  • Location:

Health insurance premiums can vary by state and region, reflecting differences in the cost of living and healthcare services.

  • Plan type:

There are several types of health insurance plans to choose from, each with its own cost structure.

Popular options include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations (EPOs).

  • Coverage level:

The extent of coverage provided by the plan, such as deductibles, co-payments, and out-of-pocket maximums, can significantly impact the cost of health insurance.

  • Employee demographics:

The age, gender, and health status of your employees can also influence the cost of health insurance.

When is it Necessary to Offer Health Insurance to Employees?

In the United States, the Affordable Care Act (ACA) mandates that businesses with 50 or more full-time equivalent (FTE) employees must offer health insurance or face penalties.

This is known as the “employer mandate.”

However, even if your business has fewer than 50 employees, offering health insurance can still be a valuable benefit that can help you attract and retain a high-quality workforce.

Benefits of Offering Health Insurance to Your Employees

Before diving into the costs, it’s important to understand the benefits of offering health insurance to your employees.

Here are a few key advantages:

1. Attract and retain top talent:

Health insurance is a highly valued employee benefit.

By offering coverage, you can attract top talent and encourage existing employees to stay with your company.

2. Better health outcomes:

Providing health insurance can improve the overall health and well-being of your employees, resulting in fewer sick days, increased productivity, and a more positive work environment.

3. Tax advantages:

Small businesses that offer health insurance may be eligible for tax credits and deductions, which can help offset the cost of coverage.

4. Employee satisfaction:

A comprehensive benefits package that includes health insurance can boost employee morale and lead to higher job satisfaction.

How to Provide Employee Health Insurance for Small Business Owners

There are several ways small business owners can provide health insurance to their employees. Some popular options include:

1. Small Business Health Options Program (SHOP):

The SHOP Marketplace is an online portal where small businesses can compare and purchase health insurance plans for their employees.

Available to businesses with 1-50 employees, SHOP offers flexibility in terms of plan selection and contribution levels.

2. Private health insurance exchanges:

Small businesses can also purchase group health insurance plans through private exchanges, which often provide additional plan options and support services.

Examples include eHealth and Gusto.

3. Professional Employer Organizations (PEOs):

PEOs, such as Justworks and TriNet, allow small businesses to outsource their human resources functions, including benefits administration.

By partnering with a PEO, small businesses can access a wider range of health insurance options and potentially lower costs by joining a larger group of employers.

4. Directly through insurance carriers:

Small businesses can also purchase group health insurance plans directly from insurance carriers, such as Blue Cross Blue Shield or UnitedHealthcare.

Before selecting a health insurance plan for your small business, it’s essential to carefully consider the needs of your employees and your business’s budget.

Be sure to compare multiple plan options, taking into account factors such as premiums, deductibles, co-payments, and provider networks.

In Summary…

Providing health insurance to your employees can be a significant investment for small business owners.

However, the benefits of offering coverage—including improved employee satisfaction, better health outcomes, and increased productivity—can far outweigh the costs.

By considering the various factors that influence the cost of health insurance and exploring the different options for providing coverage, you can make an informed decision that best meets the needs of your employees and your business.

Don’t wait to give your employees the health coverage they deserve.

Take Initiative!

Book a FREE Consultation now and let’s explore the best health insurance options for your small business.

Discover comprehensive plans tailored to your company’s size, location, and budget.

Remember, a healthier workforce leads to increased productivity and employee satisfaction.

Join countless other successful businesses by providing top-tier health insurance for your employees today!


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About the Author

jack nicholaisen
Jack Nicholaisen

Jack Nicholaisen is the founder of After acheiving the rank of Eagle Scout and studying Civil Engineering at Milwaukee School of Engineering (MSOE), he has spent the last 4 years disecting the mess of informaiton online about LLCs in order to help aspiring entrepreneurs and established business owners better understand everything there is to know about starting, running, and growing Limited Liability Companies and other business entities.