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.
Let’s start with the regulatory side of things.
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.
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.
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.
Let’s unpack that last point.
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.
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.
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.
“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.
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.
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.
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.
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.
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.