59%Small firms (10–199 workers) offering health benefits
97%Large firms (200+) offering benefits
$6,4502026 QSEHRA limit, self-only
$13,1002026 QSEHRA limit, family
Key takeaway: Small employers can offer a traditional group plan, or reimburse employees’ individual premiums tax-free through a QSEHRA (for firms under 50 employees, with annual caps) or an ICHRA (any size, no cap). Group plans are familiar and easy for employees but expensive; reimbursement arrangements give cost control. Only 59% of small firms offer health benefits, so offering them helps you hire.
How we put this guide together: We used the KFF 2025 Employer Health Benefits Survey, PeopleKeep’s summary of 2026 QSEHRA limits, HealthCare.gov and IRS guidance as summarized by our sources. This is general information; talk to a broker or tax adviser for your situation. Rules and figures were checked in October 2026. Health insurance rules change often, so confirm details at HealthCare.gov or your state marketplace. See our advertiser disclosure.

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What employers pay for group cover

In 2025, the average employer health plan cost $9,325 a year for single cover and $26,993 for family cover. Employers paid on average about 84% of single premiums and 75% of family premiums. Small-firm plans often have higher deductibles: $2,631 for single cover at firms with 10–199 workers, versus $1,670 at larger firms.

Your options compared

Group health planQSEHRAICHRA
Who can offerAny employer (insurer rules apply)Fewer than 50 full-time equivalent employees, no group planEmployers of any size
How it worksEmployer buys one plan for the groupEmployer reimburses individual premiums and medical costs tax-free up to a capEmployer reimburses individual premiums tax-free; can set amounts by employee class
Annual limitNone$6,450 self-only / $13,100 family (2026)None
Employees needNothing extraTheir own qualifying coverIndividual health insurance
Cost controlLow: premiums change each yearHigh: fixed allowanceHigh: fixed allowance

Sources: PeopleKeep (2026 QSEHRA limits); KFF 2025 EHBS. Reimbursement arrangements interact with Marketplace subsidies, so employees should get advice before enrolling.

Reimbursement arrangements are still uncommon: KFF found 4% of firms offering health benefits, and 9% of those that don’t, provided money for employees to buy individual cover in 2025.

Group health plans

A traditional small-group plan gives everyone the same insurer and network, and premiums are paid with pre-tax dollars. Insurers often require a minimum share of eligible employees to enroll. Small-group plans must meet ACA rules, including covering essential health benefits and not pricing on health status. Businesses with fewer than 25 employees and modest average wages that buy through the SHOP Marketplace may qualify for the small business health care tax credit for up to two years.

QSEHRA

A qualified small employer health reimbursement arrangement lets employers with fewer than 50 full-time equivalent employees reimburse workers tax-free for individual premiums and medical expenses, up to $6,450 for self-only or $13,100 for family cover in 2026 ($537.50 and $1,091.66 a month). It must be offered on the same terms to all eligible full-time employees, and employees must have qualifying health cover.

ICHRA

An individual coverage HRA has no contribution limit and can be offered by any size employer. You can set different allowances for classes of employees, such as full-time and part-time, or workers in different locations. Employees buy their own individual plans. Firms of 50 or more employees can use an ICHRA to meet ACA employer requirements if the allowance makes coverage affordable.

How to choose

  1. Set your budget per employee per month.
  2. Survey your team: ages, families, preferred doctors and whether they value a single shared plan.
  3. Get group quotes from a broker and compare with a QSEHRA or ICHRA allowance.
  4. Check the Marketplace in your area: if individual plans are good value, an HRA can work well. See our insurer guide.
  5. Consider other benefits such as an HSA-eligible plan with employer contributions.

For the rest of your business cover, see our business insurance hub; if you’re a sole proprietor, see health insurance for the self-employed.

Frequently asked questions

Are small businesses required to offer health insurance?

No. The ACA employer requirement applies to employers with 50 or more full-time equivalent employees.

What is a QSEHRA?

A tax-free reimbursement arrangement for employers with fewer than 50 employees and no group plan, capped at $6,450 (self-only) or $13,100 (family) in 2026.

What is an ICHRA?

An individual coverage HRA that lets employers of any size reimburse employees’ individual health insurance premiums tax-free, with no annual cap.

How much does small business health insurance cost?

Group plans averaged $9,325 per year for single cover and $26,993 for family cover in 2025, with employers usually paying most of it.

Is there a tax credit for small business health insurance?

Small employers with fewer than 25 employees and modest average wages may qualify for a tax credit when buying through the SHOP Marketplace, for up to two years.

Sources

Insurance prices, discounts and rules change often and vary by state. Figures were checked in October 2026; confirm details with the insurer or your state insurance department.