What's the Cost of Small Business Health Insurance?
Health insurance for small business employees in total costs an average of $9,131 per year for a single worker or $25,167 per year for family coverage.
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Of this, a single worker typically pays $1,204 per year and the employer pays the other $7,927 per year.
For an entire family, a worker is responsible for $7,947 per year, while their employer pays the other $17,220 per year, on average.
What's the average cost of small business insurance?
Small business owners pay $661 per month for a single worker's health insurance, on average. That figure jumps to an average of $1,435 per month to cover a family.
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Most small business insurance plans require employers to pay at least half of their workers' monthly rates. The average small business pays 86% of the monthly cost for a single worker. That falls to about two-thirds of the total monthly cost for a family health plan.
Average employee health insurance cost per month
Dollar cost
Percentage covered
Worker pays | Employer pays | |
|---|---|---|
Individual | $100 | $661 |
Family | $662 | $1,435 |
Dollar cost
Worker pays | Employer pays | |
|---|---|---|
Individual | $100 | $661 |
Family | $662 | $1,435 |
Percentage covered
Worker pays | Employer pays | |
|---|---|---|
Individual | 14% | 86% |
Family | 33% | 66% |
Small business health insurance lets your employees get coverage for less than they'd pay for marketplace coverage. Although small business owners don't have to buy insurance for their employees, doing so is often helpful for attracting and keeping good workers.
Nearly 4 in 10 small business employees who have a single health insurance plan pay nothing for health insurance. That's compared to 1 in 20 workers at larger businesses.
But roughly one-quarter of small business workers who have family coverage pay more than half the cost of their monthly rate. Only 1 in 20 workers at larger businesses pay that much.
Factors that affect small business health insurance costs
Age, tobacco use and where you live all have major impacts on the cost of small business health insurance. Other factors like the health insurance plan level you choose and whether you offer a PPO or HMO can also affect your monthly rates.
The Affordable Care Act (also called "Obamacare") doesn't let insurance companies use employees' health history when setting rates or approving coverage. That means your workers won't have to pay more if they have or have had a serious health problem like cancer or a heart attack.
Health insurance plan types
You can choose from four different health insurance plan tiers. Silver health plans work the best for most small businesses because they have affordable monthly rates, and your employees won't spend too much when they visit the doctor. However, the best plan tier for your business will depend on your individual needs.
- Bronze plans have the cheapest monthly costs, but your employees will pay more when they go to the doctor. These plans make sense if you have a workforce that's mostly young and healthy.
- Silver plans strike a balance between middle-of-the-road rates and affordable costs when your employees go to the hospital. That makes them a good choice for the average worker.
- Gold plans have expensive monthly rates, but these plans cover most of your medical costs. Consider offering Gold health insurance if your workers need a lot of health care.
- Platinum plans have the highest monthly rates, but your employees will pay very little at the doctor's office. A Platinum plan might suit your business if many of your employees are old or in poor health.
All four plan types cover the same services including the 10 essential services required by the Affordable Care Act, such as mental health, care for pregnant women and preventive services. In other words, a Bronze plan will cover all of the same health services as a Platinum plan.
Keep in mind, employers typically pay more for Gold and Platinum plans than for Silver and Bronze plans. That's because higher plan tiers tend to have more expensive monthly rates than lower plan tiers.
Small business health insurance costs: HMOs vs. PPOs
The amount you pay for health insurance depends, in part, on whether you choose a PPO (preferred provider organization) or an HMO (health maintenance organization) plan for your workers.
PPOs offer more freedom when it comes to choosing your doctors, but these plans usually have high monthly costs. HMOs tend to cost less than PPOs, but they limit your workers to a network of doctors. HMOs also require a referral from your primary care doctor before you can see a specialist.
Best health insurance companies for small businesses
The best health insurance company for your small business will have low rates, good customer service and many coverage options.
Kaiser Permanente offers the best overall combination of cheap rates and good customer service among major health insurance companies. But you can't get coverage everywhere. The company only sells health insurance in eight states and Washington D.C.
UnitedHealthcare is a good choice if you also want to offer your employees access to many coverage extras like dental, vision and disability insurance under one umbrella.
When shopping for health insurance for your small business, make sure to look at the company's network of doctors. Ideally, your company's insurance should include local doctors and major hospitals, so your employees can easily get in-network care.
Blue Cross Blue Shield has the largest network of doctors nationwide. That makes it a good choice if your employees travel for work often.
How do you buy health insurance for a small business?
The best way to buy group health insurance for your business is through a government-run marketplace, called the Small Business Health Options Program (SHOP). That's because you may qualify for discounts, also called subsidies, that can pay for up to half of your business's health insurance costs.
To qualify for subsidies, you need to offer a plan to all of your full-time employees and meet the following standards.
- You need to have fewer than 25 full-time workers.
- Your average worker needs to make less than $56,000 a year
- You need to cover at least half of your worker's health insurance costs
You can also buy small business health insurance through a broker or a health insurance company. But you won't get subsidies if you take those routes.
Many states require that at least 70% of your employees sign on to your company's health plan. Otherwise, the government might not let you continue to offer coverage through your small business.
Other ways to buy health insurance for your small business
You could also hire a human resources company, called a professional employer organization (PEO), that will run your small business's health insurance plan for you. PEOs can help you get cheaper monthly rates for health insurance. You may also prefer to work with a PEO if you don't want to learn the ins and outs of health insurance rules and regulations.
You can give your workers greater flexibility in choosing their health care coverage by paying your employees back for their health insurance costs with what's known as a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
A QSEHRA lets small business owners reimburse their workers for health care costs like their monthly rate, copays and coinsurance using pretax income. The 2025 limits for a QSEHRA are $6,350 per year for a single person or $12,800 per year for a family.
You can start a QSEHRA at any time of the year.
Frequently asked questions
What's the average cost of small business health insurance?
Small businesses spend $661 per month for a single person's health insurance, on average. That increases to an average of $1,435 per month for family coverage.
What are the best health insurance companies for small businesses?
Kaiser Permanente is the best health insurance company for small businesses. The company offers high-quality care and cheap rates. UnitedHealthcare is also a good option because of its many coverage options.
How do small businesses get health insurance?
Small businesses can get coverage through an online government-run marketplace, called the Small Business Health Options Program (SHOP).
You can also buy insurance through a broker or directly through a health insurance company. But you can only qualify for discounted health insurance when you buy through SHOP.
Sources and methodology
Average health insurance cost data is from the KFF 2024 Employer Health Benefits Survey. Information about government subsidies and the Affordable Care Act (ACA) came from HealthCare.gov.
Editorial note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.