Offering health insurance can be a crucial factor in enticing and retaining employees for a small business. One avenue for small businesses to acquire health coverage is through the Affordable Care Act (ACA).
In our assessment, we reviewed major insurance providers offering ACA marketplace plans to identify the top health insurance companies nationwide. Kaiser Permanente and Blue Cross Blue Shield emerged as the top performers in our analysis.
Best Health Insurance Companies for Small Business Owners
- Kaiser Permanente – Best Overall
- Blue Cross Blue Shield – Best Provider Network
- UnitedHealthcare – Best for Breadth of Insurance Options
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 may define it differently.
A small business owner enrolls in a group health insurance plan offered by a private insurance company and then provides their employees the opportunity to enroll in that plan. The employer pays part of their employees’ monthly premiums, while employees typically pay smaller premiums, as well as their deductibles, copays, coinsurance and services not covered by the plan.
Small business owners contract with health insurance companies and decide how many options to provide to employees.
Do Small Businesses Have to Provide Health Insurance?
Small business owners aren’t legally required to provide health insurance to their workers, but there are rules for those who do.
With that said, make sure you understand how your state defines a small business, as it will impact what you are required to provide, should you decide to offer health insurance to your employees.
Small Business Health Insurance Options
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.
Your business must meet these requirements to qualify for the SHOP tax credit:
- Fewer than 25 full-time equivalent (FTE) employees
- Average employee salary is about $56,000 per year or less
- Pay at least 50% of your full-time employees’ premium costs
- Offer SHOP coverage to all full-time employees
Small business owners can also work with a health insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge. Or they can buy directly from a health insurance company.
If you buy coverage through the ACA marketplace, plans are organized by “metal” tiers: bronze, silver, gold and platinum. The tiers differ by premiums and out-of-pocket costs. For instance, bronze and silver plans have low premiums but higher deductibles and coinsurance. Gold and platinum plans have high premiums but lower out-of-pocket costs.
Employers have flexibility in which type of plans they choose to offer their employees.