Providing health insurance is crucial for any small business wanting to attract top talent. But with so many options, how do you pick the right plan? This definitive guide explores the pros and cons of various 2025 health insurance choices for small businesses.
Health Insurance 101: Your Options
Small businesses have several ways to offer health coverage:
Group Health Insurance
This traditional option has employees enroll in the company’s plan. The business contracts with an insurer like UnitedHealthcare to cover a group of people together.
Pros:
- Cost savings from risk pooling
- Greater coverage variety
Cons:
- Insurers may require minimum participation
- Premium costs are rising
QSEHRA
Qualified Small Employer Health Reimbursement Arrangements let businesses with under 50 full-time employees reimburse staff for health insurance premiums and medical expenses.
Pros:
- Pre-tax reimbursements
- No participation minimums
Cons:
- Employers can't offer group coverage
- Coverage isn't guaranteed for all employees
ICHRA
Individual Coverage Health Reimbursement Arrangements are similar to QSEHRAs but open to all business sizes.
Pros:
- No group plan required
- Flexibility in reimbursement amounts
Cons:
- No premium cost savings
- Administration can be complex
Health Sharing
Health sharing ministries function like co-ops where members share expenses. They aren't insurance but offer an affordable alternative.
Pros:
- Lower monthly costs
- Customizable benefit options
Cons:
- Pre-existing condition exclusions
- No guarantee of payment
Top Health Insurance Providers for Small Business
With your options explained, let’s explore some top carriers to consider for 2025.
Major Insurance Brands
National insurers like Aetna and Cigna offer comprehensive coverage through extensive provider networks. But bigger isn’t always better.
UnitedHealthcare
UnitedHealthcare brings over 45 years of experience serving small business clients. They offer group plans, bundled products, and digital resources.
Kaiser Permanente
Focusing on preventative care and integrated services, Kaiser Permanente is one of the largest non-profit health plans with a strong HMO presence.
Cigna
Cigna has a reputation for flexible plan options and specialized programs that reduce claims costs. Their plans integrate wellness incentives.
Boutique Carriers
Specialized insurers provide niche offerings like cash plans and health sharing.
Medi-Share
One of the largest health sharing ministries, Medi-Share has over 400,000 members. Christian-based plans have monthly contributions under $300.
Aliera Healthcare
Offering Trinity HealthShare plans, Aliera provides affordable alternatives to traditional insurance. Many pre-existing conditions are covered after 24 months.
Entrust
Entrust only sells cash plans. For small fees, members get discounted services from the PPO network with no deductibles.
What Plan is Best for Your Team?
Choosing the right small business health insurance involves understanding your workforce’s needs. Consider these key factors:
Health Plan Types
Major medical plans from leading insurers offer rich coverage. High-deductible options have lower premiums but high out-of-pocket costs before coverage kicks in.
Basic and supplemental plans pay set cash benefits for services and prescription drugs. These are affordable additions to other policies.
Health sharing works well for healthier groups wanting a cost-effective, values-based option. But pre-existing conditions may not be covered.
Cost Considerations
Look at premiums, deductibles, copays, and total out-of-pocket costs. Self-funded plans may save money over time but carry financial risk.
Tax credits, HSAs and HRAs can reduce expenses. Compare quotes carefully.
Network Coverage
Ensure the provider network meets your localized needs or offers telehealth options. National insurers tend to have broader coverage.
Plan Customization
Some carriers offer customized group plans with options like dental, vision, life insurance, HSAs or HRAs bundled in.
Tiered coverage levels allow cost-sharing by employee categories like management and hourly workers.
ACA Requirements and Compliance
While shopping for 2025 health plans, don’t forget about Affordable Care Act rules and tax considerations.
Affordability Standards
ACA-qualified plans must cover essential health benefits and cap annual out-of-pocket costs.
Premiums can’t top 9.61% of employee income in 2024. Watch for updated 2025 rates.
Tax Benefits
Premiums are business tax deductions. Employees don’t pay taxes on employer-sponsored plans.
HSA and HRA contributions also bring savings. Use Section 105 plans to make benefits tax-free.
Reporting Requirements
Send 1095-B and 1095-C forms to document coverage. Report on IRS Forms 1094-B and 1094-C. Penalties apply for non-compliance.
The Best Health Insurance for Small Business in 2025
As we’ve seen, there are pros and cons to various options when choosing health insurance for your small business. Here are a few great choices to consider for 2025:
Kaiser Permanente HMO: For cost-effective local care with a focus on prevention and health management.
Cigna PPO: If you want flexibility and a large national network alongside wellness incentives.
ICHRA: To control costs through tax-advantaged reimbursements. Pair with individual health plans.
Medi-Share: For an affordable care sharing model if your team is generally healthy.
Work with a broker or advisor to match the right plan to your workforce, budget, and benefits strategy. Providing quality health insurance impacts recruitment, retention, and your bottom line.
FAQs About Small Business Health Insurance
Still have questions? Here are answers to some frequently asked questions:
Q: How much does small business health insurance cost?
Premium costs vary widely based on plan type, benefits, deductibles, employee demographics, and more. Average monthly premiums range from $300 to $600+ per employee.
Q: What are the minimum essential health benefits?
ACA plans must include: hospitalization, ER services, maternity and newborn care, mental health services, prescriptions, preventive services, pediatric services, lab tests, and chronic disease management.
Q: Can I reimburse employees for individual plans?
Yes, using options like a QSEHRA or ICHRA lets you reimburse for personal health premiums and medical expenses tax-free. There are rules around eligibility and documentation.
Q: Are there resources to make insurance more affordable?
Small business health care tax credits, HSAs, and HRAs all provide savings. Your state may also have subsidies, pools or partnership plans for small groups.
Q: What are the penalties for not offering ACA-compliant coverage?
The tax penalty for not offering affordable, minimum value coverage in 2023 is $2,880 per full-time employee annually, excluding the first 30 workers. Penalties will increase each year.
Get the Best Small Biz Health Insurance
Finding the right insurance for your growing company is key to attracting talent while controlling costs. Now that you know the top options to consider in 2025, you can make an informed choice. Reach out to leading carriers and advisors to discuss what works best for your small business.