If you own a small business and are looking to attract—and keep—employees, providing health insurance to your workers may help. A 2018 survey conducted by American Health Insurance Plans found 56% of participants said receiving health insurance benefits impacted their decision to stay at their current job.
“This is particularly true if your employees are highly skilled, earn good salaries and can easily find jobs that offer benefits—you’ll want to offer good health benefits to attract these workers,” says Bruce Jugan, president of BenefitsCafe.com, an insurance broker in Montebello, California.
Since the health insurance marketplace is vast, we did the initial research for you and ranked the best health insurance providers for small business owners. Read on to see which companies made our list.
To determine the best health insurance providers for small business owners of 2021, the Forbes Health editorial team evaluated U.S. insurance companies that offer plans nationwide by the benefits they offer, the sizes of their provider and hospital networks, how easy it is to enroll in the plans and their reputations among agencies like A.M. Best and FitchRatings (which evaluates a company’s financial health).
How Does Small Business Health Insurance Work?
The Affordable Care Act (ACA) defines a small business as a group of no more than 50 full-time employees (FTE), though some states define it differently. California, for instance, categorizes small businesses as employers of no more than 100 FTE. Small business owners aren’t legally required to provide health insurance to their workers, but there are rules for those who do.
A small business owner enrolls in a group health insurance plan offered by a private insurance company and then offers their employees the opportunity to enroll in that plan. The employer pays part of their employees’ monthly premiums, and the employees are typically responsible for their deductibles, copays and services not covered by the plan.
Small Business Health Insurance Options
Thanks to the ACA, small business owners can buy health insurance for their employees through approved insurance companies with the Small Business Health Options Program (SHOP). Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
Small business owners can also work with an insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge.
Group plans for small businesses are organized by “metal” tiers: bronze, silver, gold and platinum. Each tier features different premiums, deductibles, copays and out-of-pocket limits, catering to people who prefer to pay higher monthly premiums for more extensive coverage and those who’d rather pay a lower monthly premium and risk higher coverage costs in the event that they need to seek care. Employers have flexibility in which type of plans they choose to offer their employees.
Small Business Health Insurance Requirements
Small business owners do not have to provide health insurance benefits to employees. Should they choose to do so, they must meet certain requirements set by the ACA below. These requirements can vary by state.
- Inclusivity: Health insurance must be offered to all employees—not just managers or any other subgroup.
- Coverage of essential health benefits: Under the ACA, a health plan offered by a small business owner must include coverage for basics, such as emergency services, pregnancy-related care and services, maternity and newborn care, outpatient care, prescription drugs and more.
- Minimum contribution: The ACA requires small businesses to contribute at least 50% of the monthly premium cost of the plans they offer to qualify for the Small Business Health Care Tax Credit, says Jugan, and states have their own variations of this rule. New Jersey, for instance, requires small business owners to pay at least 10% of the total cost of the plan. “The less an employer pays, the more the employee has to pay,” notes Jugan, which can be a downside for some workers, who may decide to seek another job with a less expensive health plan.
In addition to these rules, states typically require a minimum percentage of employee participation in health insurance plans offered by small businesses, says Jugan. “The reason behind this [rule] is if there are 10 employees in a company and only three enroll, it’s likely that those three are really sick.” To better distribute the costs, total enrollment should be a mix of individuals with varying health statuses.
Average Cost of Health Insurance for a Small Business
The cost of offering health insurance for a small business owner depends on the plan choice and how much the employer wants to pay. “The average cost for small business owners is $400 to $500 per employee per month,” says Jugan. “If the business has a lot of older employees, then it might cost more,” he adds.
How to Get Health Insurance for a Small Business
You have several options when it comes to searching for the right plan options for your small business:
- Do your own footwork. Small business owners can sort through options from different insurance companies to compare prices and services and enroll in a plan that meets their needs. Most health insurance companies offer a number of plans for small businesses. By plugging a minimal amount of information into forms on their websites (your ZIP code and number of employees), you can see plan choices and costs.
- Work with an insurance broker. Insurance brokers know the ins and outs of health insurance plans, as well as state and federal requirements. “We can compare the plans and figure it all out for you,” says Jugan. “It’s an administrative burden and we can alleviate that. Insurance is complicated, and a lot of small business owners don’t want to think about it.” He adds that you don’t pay any fees for using insurance brokers, as their costs are covered by insurance companies. Just be sure you’re working with an independent or agnostic broker who will show you all plans available to you to best meet your needs.
- Explore the SHOP Marketplace at healthcare.gov for expert guidance, helpful calculation tools and clear choices for high-quality group insurance plans.
To determine the best insurance providers for small business owners of 2021, the Forbes Health editorial team evaluated insurance companies that offer plans nationwide in terms of:
- How many states in which they provide coverage
- Provider and hospital network size
- Benefit options and details
- How easy it is to enroll in their plans
- How agencies like A.M. Best and Fitch Rating ranked them in terms of their financial health (which impacts how reliable an insurer is when it comes to paying claims)