Estimate employer and employee premiums, contributions, and tax savings
The average cost of small business health insurance ranges from $450 to $750 per employee per month, depending on the plan tier, employee age, and location. Most small businesses contribute 50-100% of employee premiums, with the remaining cost paid by employees through payroll deductions.
Several factors determine your small business health insurance costs: the number of employees enrolled, their average age, your business location (state), the plan tier you select (Bronze, Silver, Gold, or Platinum), and what percentage of premiums your company pays. Older employees and more comprehensive plans typically have higher premiums.
Employer contributions to employee health insurance are 100% tax-deductible as a business expense. Additionally, small businesses with fewer than 25 full-time equivalent employees may qualify for the Small Business Health Care Tax Credit, which can cover up to 50% of premium costs if you pay at least 50% of employee premiums and average wages are below $64,000.
Small businesses can purchase health insurance through the Small Business Health Options Program (SHOP) marketplace or directly from private insurers. SHOP plans are required for eligibility for the Small Business Health Care Tax Credit. Compare options from multiple sources to find the best rates and coverage for your business.
Under the Affordable Care Act (ACA), businesses with 50 or more full-time equivalent employees must offer health insurance or face penalties. Businesses with fewer than 50 employees are not required to offer coverage but may choose to do so to attract and retain employees. If you offer coverage, you must meet minimum coverage and affordability standards.