Top Employee Benefits Questions Answered

Health insurance isn’t just a perk anymore. Employees see it as a baseline requirement, making it a key part of staying competitive in today’s job market. But for owners of small and mid-sized businesses, figuring out how to offer it (or if you even have to) can feel like solving a Rubik’s Cube in the dark. Let’s flip on the light switch.

In this blog, we’re answering the most common and critical questions about employee benefits, with a special focus on group health insurance.

• Are you legally required to offer coverage?
• What’s the upside if you do?
• How much will it cost, and how can you keep it affordable?
• What are your options for delivering coverage?
• Can a PEO simplify the process?

Let’s start with the regulatory side of things.

Are Small Businesses Required to Offer Group Health Insurance?

In short, maybe. Most small businesses aren’t legally required to offer health insurance.

If you’ve got fewer than 50 full-time employees (FTEs) or the equivalent in part-timers, the Affordable Care Act doesn’t mandate you to provide coverage. That threshold is the government’s line in the sand. Once you cross it, you're expected to offer affordable group health insurance or risk penalties from the IRS. Stay under 50, and it’s technically optional.

Here’s a quick breakdown:

• Under 50 FTEs: No federal requirement to offer group health insurance.
• 50+ FTEs: Must offer affordable coverage to at least 95% of full-time staff, or face financial penalties.
• Full-time = 30 hours/week by IRS standards.

Now, just because you can skip it doesn’t mean you should. Health benefits are often the difference between keeping top talent or losing them to your competitors. Employees care a lot about health insurance, and if you’re trying to build loyalty, reduce turnover, or attract better candidates, offering coverage is one of the smartest plays you can make.

What Are the Benefits of Offering Group Health Insurance?

Yes, health insurance can be expensive, but the evidence shows that not offering it can be even costlier in the long run. Small businesses that offer group health insurance consistently outperform those that don’t in employee retention, satisfaction, and recruiting. The reason is simple: today’s employees view health insurance as a baseline expectation, not just a nice bonus.

What you get when you offer health insurance:

• Better hiring power. Top candidates often won't consider working for companies without it.
• Stronger employee loyalty. Good benefits = lower turnover.
• Happier, healthier staff. Covered employees take care of themselves and show up to work more consistently.
• Tax advantages. Premium contributions are tax-deductible, and some small businesses qualify for the Small Business Health Care Tax Credit.

Let’s unpack that last point.

What is the Small Business Health Care Tax Credit?

If your business has fewer than 25 employees and pays at least half of their premiums, you might qualify for a tax credit worth up to 50% of your contribution as long as you use the SHOP marketplace. Even if you don’t qualify, employer-paid premiums are still a deductible business expense.

Can My Small Business Afford Group Health Insurance? (You Have Options)

We won’t sugarcoat it; group health insurance can be a big expense. For many small businesses, it’s the second-largest cost after payroll. But it’s not an all-or-nothing situation. You’ve got options, and the price tag doesn’t have to wreck your budget.

Cost variables you should watch:

• Employee headcount and average age
• Plan type (HMO, PPO, HDHP, etc.)
• Coverage tier (employee-only vs. family)
• Your contribution rate vs. what employees pay

National averages say you’re looking at roughly $7,000-$22,000 per year, per employee, depending on coverage level. But here’s the key: you control how much you contribute. Many small employers cover around 70-80% of the employee premium and less (or none) for dependents. It’s flexible, and BBSI can help model what’s realistic for your business.

Why You Can’t Afford Not to Have Group Health Insurance

“Can we afford to offer this?” is a smart question, but there’s a good chance the smarter one is, “Can we afford not to offer this?”

Offering even basic coverage reduces absenteeism, improves morale, and cuts down on the, “I need a raise,” conversations. Most importantly, with the right setup, group health insurance doesn’t have to drain your cash flow. High-deductible plans, employer HSA contributions, or working with a PEO to access better rates are all ways to protect your people without torching your bottom line.

Since you’re definitely curious now, let’s talk more about some of those options.

What Are My Options for Offering Group Health Coverage?

You’ve decided to explore offering health insurance. Great, now what? There’s more than one way to get coverage for your team, and each path comes with trade-offs in cost, complexity, and control.

Your main options look a little like this:

• Buy directly from a carrier. You shop plans yourself or with a broker. More work, but more control.
• Use a health insurance broker. They help you compare plans, explain options, and handle some admin.
• Go through the SHOP marketplace. Good for tax credits, but limited availability in some states.
• Lean on BBSI. The BBSI Benefits Program and Business Unit Team give you a competitive edge.

If you’ve got time, bandwidth, and some HR savvy, buying direct or working with a broker might be fine. But most small business owners don’t want to spend their afternoons on hold with an insurance company. That’s where a PEO shines.

Already Working with BBSI? Here's How to Maximize Your Group Health Insurance Support

If you’re partnered with BBSI, you’re not navigating the health benefits maze alone. In fact, you’ve got a team behind you that’s just a phone call away.

Here’s What You Can (And Should) Be Using BBSI For:

• Plan selection support. Your Business Partner and Benefits Consultant can help you evaluate whether your current group health insurance plan still fits your team and budget.
• Annual enrollment guidance. Don’t wing it. Lean on BBSI to help you prepare, communicate, and execute a smooth open enrollment process.
• Employee questions and onboarding. If your employees are confused about coverage, eligibility, or claims, send them to us. We field those calls so you don’t have to.
• Compliance support. BBSI monitors changes in employment law and provides guidance and resources to help you stay aligned with federal and state benefits regulations.

If it’s been a while since you’ve reviewed your current offering, reach out to your Business Partner. They can loop in the right team and help you make sure your benefits are still working for you and your people.

Stay Ahead with BBSI’s Group Health Insurance Expertise

You already know the value of having BBSI in your corner. But the more you engage with our team, the more value you unlock, especially when it comes to group health insurance. Let’s make sure your benefits are doing exactly what they should: supporting your team, strengthening your culture, and simplifying your day-to-day.

If you’ve got questions, concerns, or just want to be sure you’re offering the best possible benefits package for your team, don’t go it alone. Reach out to a BBSI Business Partner to get personalized, expert guidance tailored to your business and your people.