How Much Is Small Business Health Insurance?

Employer-sponsored insurance is a vital source of healthcare coverage for millions of Americans. In fact, recent research suggests that nearly 159 million nonelderly people are currently relying on this type of coverage to access the care they need. This impressive figure speaks volumes about the immense importance of employer-sponsored insurance in our healthcare system, and underscores the critical role played by employers in keeping our communities healthy and thriving. 


Whether you’re an employer looking to provide the best possible coverage for your employees, or a healthcare professional committed to delivering high-quality care to all, it’s clear that understanding the impact of employer-sponsored insurance is key to building a healthier, more equitable future for all. The good news is that there are many options available to meet the unique needs of any sized business, from sole proprietorships to large corporations. In this blog post we will explore how much small business health insurance costs and show you some innovative ways to reduce your premiums without sacrificing quality coverage.


"How Much Is Small Business Health Insurance?" is written over a stack of papers, a calculator and a pair of eyeglasses on a desk.

How much do Employers and employees contribute towards monthly premiums?

The Kaiser Family Foundation’s annual Employer Health Benefits Survey reveals the amount employers spend on health insurance premiums for their employees. In 2022, the average annual premiums for individual coverage cost up to $7,911, while premiums for family coverage were $22,463. 


Workers’ contributions to the cost of their healthcare premiums also remained stable in 2022. On average, employees pay around 17% for single coverage and 28% for family coverage. This means that, for 2022, employees kicked in a respective $1,327 for single coverage and $6,106 toward their family plans. These figures are also similar to 2021’s numbers, indicating a level of consistency in the healthcare landscape.

Inflation’s impact on small business health insurance 

While the premiums for 2022 are in line with those of previous years, the increase in workers’ wages and inflation has created a contrast. It seems that the premiums for 2022 were determined before the full impact of inflation was realized. But, as we continue to see inflation rates as high as 8%, it’s very likely that we will see a larger increase in premiums for 2023.


These numbers clearly indicate the weighty burden that healthcare expenses place on both employers and employees, highlighting the critical importance of adequate health insurance coverage.

How many workers are covered by employer-sponsored health plans?

Although it’s great news that over half of all companies provided some form of health benefits in 2022, the divide between large and small firms is still alarmingly wide. Bigger businesses tend to be more generous with over ninety percent (93%) of firms with more than 50 employees offering health benefits in 2022. 


However, smaller businesses are less likely to offer any benefits at all. In fact, the percentage of small firms providing health benefits fell from 59% in 2021 to 51% in 2022, which highlights the ongoing struggle for many workers to access affordable healthcare.

Affordable small business health insurance options

Small Business Health Options (SHOP) Marketplace

With SHOP, the federal government’s database for finding comprehensive health insurance coverage, you can easily compare plans from top-rated carriers. Not only that, but there are built-in filters to help you find the perfect plan, whether you need medication coverage, prescription drug reimbursement, hospital care, and more. Requirements for SHOP vary by state, but in order to qualify most businesses must:

  • Have a physical work site within the state
  • Employ between 2-50 full-time employees (excluding family members, partners or spouses)
  • Offer coverage to full-time employees working 30 or more hours per week, and 
  • Enroll at least 70% of employees in the insurance plan. 

With SHOP, small businesses can access affordable and comprehensive health insurance options for their employees.

The Individual Coverage HRA (ICHRA)

Small businesses looking for a flexible health benefits option should consider the individual coverage HRA (ICHRA). This innovative alternative to traditional group health insurance offers employers the freedom to choose it as their sole health benefit option or as an option for employees who do not qualify for existing group benefits. 


One of the key advantages of the ICHRA is its ability to cover both individual health insurance premiums and eligible out-of-pocket health costs. Even better, the ICHRA is suitable for employers of every size—there’s no employee count requirements or participation requirements to worry about. 

Qualified Small Employer HRA (QSEHRA)

With QSEHRA, employers can give their workers tax-free reimbursements for a variety of healthcare expenses, such as premiums and coinsurance payments. But, to be eligible, your business needs to:


  • Have less than 50 full-time employees
  • Provide the same arrangement to all full-time employees
  • Not offer a group health plan or a flexible spending account (FSA)

With QSEHRA, the employer determines how much they want to contribute within an IRS-set limit, and employees can submit payment receipts for reimbursement from the program. Employers also don’t have to wait for open enrollment to offer a QSEHRA. Any time is a good time to provide this benefit to your employees. Just give them a heads up 90 days before the plan year starts. 

Self-Funded Health Insurance

By choosing a self-funded plan for employee health coverage, employers take on the responsibility of covering medical costs directly instead of relying on an insurance company. This can lead to more affordable rates and greater control over the plan. However, there is also the risk of potentially expensive claims, as there is no cap on annual claim liability. If your business is comfortable with this revenue management approach, it could end up saving you money in monthly fees and lead to savings if claims are lower than anticipated.


Concerned about taking on too much risk? Invest in stop-loss insurance. This type of coverage gives you a safety net by setting a maximum limit on the amount you’re responsible for paying towards your employees’ medical bills. Any costs beyond that limit are usually covered by the policy. By adding stop-loss coverage to your plan, you’ll be able to protect your wallet from unexpected expenses.

The Small Business Healthcare Tax Credit

Employers may be eligible for up to 50% of your employees’ premiums through The Small Business Health Care Tax Credit. This incredible benefit is available to companies that:

  • Have less than 25 full-time employees
  • Have an average employee salary of $56,000 or less
  • Offer healthcare coverage to all full-time staff members
  • Pay at least 50% of employees’ premium costs. 

Don’t miss out on this opportunity to take care of your valued employees while also saving on healthcare expenses. In order to claim this credit, small businesses must file IRS form 8941 with their taxes.

$26k Per Employee Tax Credit -

Shopping for small business health insurance

As a small business owner, finding affordable health insurance can be a daunting task, but makes it easy. Simply enter your zip code and answer a few questions about your business, and you’ll have access to free quotes from top insurance providers. Our online platform allows you to compare different plans side by side, giving you the ability to find the best option for your specific needs. 

Compare health plans

  • Find the best plans for your small business

Whether you’re looking for comprehensive coverage or a more budget-friendly option, our licensed agents are available to help you every step of the way. Don’t let the stress of health insurance weigh you down; visit today to get started.


As we’ve discussed, employer-sponsored insurance is an invaluable tool in both helping businesses provide quality coverage to their employees as well as creating a healthier, more equitable future. 


Not only does it allow employers to subsidize the cost of healthcare for their employees, reducing the financial burden on each individual and resulting in healthier employee populations overall, but it also helps ensure that people have access to higher quality health care that would otherwise not be available. 


However, with increasing premiums, many business owners may be hesitant to opt for employer-sponsored insurance without understanding how much small business health insurance costs or how they can find ways to reduce those premiums while still providing comprehensive coverage. Fortunately, employers can tailor their plan according to their size and budgetary restrictions while still ensuring the best possible coverage for their employees.

Picture of Sydney Berry
Sydney Berry

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Free Group Quotes Instantly

Compare Plans Side-by-Side