Choosing coverage for your company can feel like a maze. Do you pick a low premium, a broad network, or a plan with simple copays that keeps staff happy?
Today’s guide shows how to evaluate, compare, and buy a plan that balances costs and benefits. We highlight real carriers and tools, such as UnitedHealthcare’s Small Business Store and Blue Cross and Blue Shield options. These names matter because networks and performance cut total cost of care.
You’ll also learn key plan types — fully insured, level-funded, and alternatives like HRAs — and why transparent benefits, virtual visits, and pharmacy integration can boost satisfaction while controlling spending.
Key Takeaways
- Understand today’s landscape of small business health benefits
- Know your obligations and eligibility under the ACA
- Assess your team’s needs, budget, and risk tolerance
- Compare core group health insurance options
- Affordable alternatives and complements to group coverage
- How to shop and compare plans the smart way
- Strategies to reduce premiums and out-of-pocket costs while improving care
- Affordable health insurance for employees: steps to finalize your choice
- Conclusion
- FAQ
- Look beyond premiums to total cost of care and network value.
- Compare fully insured, level-funded, and alternative options to match risk tolerance.
- Use carrier tools and licensed agents to speed selection and avoid mistakes.
- Prioritize clear benefits and integrated services to improve the team experience.
- Focus on predictable spending and carrier performance to protect your company budget.
Understand today’s landscape of small business health benefits
A competitive benefits package is a major lever in hiring and retention. Strong offerings signal that a company values its people and can directly reduce turnover. In one 2024 survey, 78% of workers said they would leave if their benefits were lacking, which raises hiring costs and disrupts continuity.
Small firms also face clear cost pressures. KFF reports average employer contributions of $7,584 for self-only coverage and $19,276 for family coverage in 2024. Those figures help set realistic budgets and guide contribution strategy.
Participation rules and carrier requirements shape plan choice. Many carriers expect a minimum employer contribution and set participation thresholds for group plans. Aligning eligibility rules with workforce demographics—age, dependents, and location—keeps premiums predictable.
Employees now expect transparency, 24/7 virtual visits, mental health support, pharmacy savings, and care management services. These features boost perceived value without necessarily adding large employer costs.
- Leverage support: carrier digital stores and licensed agents help streamline selection and enrollment.
- Think employee-first: design benefits that match your team to improve recruiting and retention.
Explore options and tools like small business health plans to compare networks, costs, and service features before you buy.
Know your obligations and eligibility under the ACA
Start by confirming whether federal employer rules apply to your firm.
Applicable Large Employer (ALE) status begins at 50 or more full-time equivalent (FTE) staff. ALEs must offer affordable minimum essential coverage with minimum value to at least 95% of full-time workers and their dependents.
If an ALE fails to offer qualifying coverage and a worker gets a premium tax credit on an exchange plan, the employer may face penalties. Verify affordability and minimum value tests to avoid this risk.
SHOP Marketplace and the Small Business Health Care Tax Credit
The SHOP Marketplace lets eligible small employers buy group plans from national carriers, including UnitedHealthcare. SHOP can offer simpler enrollment windows than individual markets.
Small employers may qualify for the Small Business Health Care Tax Credit if they meet specific rules: fewer than 25 FTEs, average wages at or below $56,000, offer SHOP coverage, and pay at least 50% of premiums. The credit can cover up to 50% of employer-paid premiums.
- Confirm your FTE count and wage average.
- Assess whether your coverage meets affordability and minimum value tests.
- Then decide if SHOP and the tax credit fit your business this year.
Assess your team’s needs, budget, and risk tolerance
Understand your roster first. Map ages, dependents, locations, and typical utilization. This simple audit reveals whether your group needs broad access or narrower, high-performance networks.
Budget by modeling total cost of care—not just premiums. Stress-test premium ranges, employer contributions, and a contingency fund for renewal surprises or higher utilization.
Consider risk tolerance when choosing plan structure. Fully insured plans give fixed premiums and carrier-managed claims. Level-funded options, like UnitedHealthcare’s, tie payments to actual claims and may return a surplus if utilization is low.
- Weigh network strategy: broad PPOs for choice or narrow high-performance networks to lower costs.
- Prioritize experience: clear copays and no deductibles (as some Surest designs do) make benefits easier to use and reduce surprise out-of-pocket spending.
- Decide administration level: carrier-managed claims reduce workload; claims-based funding may need closer monitoring but can save money.
Finally, set contribution tiers (employee-only vs. family) and affordability targets tied to ACA rules if applicable. For a practical planning tool, review the renewal guide to stress-test scenarios and finalize your strategy.
Compare core group health insurance options
Different funding models change who carries risk, how much you pay upfront, and how flexible benefits can be. Start with a quick side-by-side view before drilling into networks and design.
Fully insured plans
Fixed monthly premiums shift claim risk to the carrier and simplify budgeting. UnitedHealthcare’s fully insured offerings handle administration and claims, which reduces employer workload.
Level-funded plans
Level-funded options set expected costs using actual claims and can return a surplus if utilization is low. They balance predictability with the chance of year-end refunds, but settlement variability matters.
Self-funded plans
Self-funding places claims risk on the company, often with a TPA and stop-loss protection. KFF notes most people in self-funded arrangements work at larger firms, where scale makes risk manageable.
Network strategy
Choose broad PPOs like BCBS BlueCard for wide provider access, or narrow/high-performance networks to lower total cost of care. Milliman’s analysis shows BCBS networks can deliver roughly 7% lower costs on average.
“Match funding and network choice to your company’s budget, risk appetite, and the care access your team needs.”
- Fully insured = simplicity and predictability.
- Level-funded = moderated risk with potential refunds.
- Self-funded = control and transparency if scale allows.
Affordable alternatives and complements to group coverage
Beyond traditional group products, several reimbursement tools let employers give choice and control while managing costs.
ICHRA: reimburse individual premiums and out-of-pocket costs tax-free
ICHRA lets an employer set monthly allowances to reimburse individual plan premiums and qualified out-of-pocket costs tax-free.
Employees must have qualifying individual coverage to receive payments. ICHRAs can be designed to meet ACA obligations for ALEs, but an employer cannot offer ICHRA and a group plan to the same employee class.
QSEHRA: budget-friendly choice for very small firms
QSEHRA fits employers with fewer than 50 FTEs and uses IRS-set annual limits. It can reimburse premiums and eligible medical costs for staff with minimum essential coverage.
GCHRA with HDHP: offset deductibles while lowering premiums
A GCHRA (integrated HRA) pairs with a group plan—often an HDHP—to reimburse deductibles and coinsurance. Premiums themselves are not reimbursable, and unused funds typically stay with the employer.
Health stipends: flexible but taxable
Stipends give cash support to part-time or contract workers and are simple to administer. They are taxable, do not require purchase of coverage, and do not satisfy ACA employer mandates.
“Choose ICHRA for maximum choice, QSEHRA for very small employers, GCHRA to boost group plan affordability, and stipends for flexible support.”
- Administrative note: HRAs require plan documents and class-based eligibility design.
- Budget control: HRAs offer tax advantages and predictable employer outlays compared to stipends.
How to shop and compare plans the smart way
Use carrier tools and licensed agents to simplify choices. UnitedHealthcare’s Small Business Store and similar quoting platforms give side-by-side pricing, plan recommendations, and live agent chat. Start there to build a shortlist you can evaluate quickly.
Use carrier tools and licensed agents to evaluate plan design
Start with carrier comparison tools to gather options, pricing, and guided recommendations. Then speak with a licensed agent who can explain underwriting rules, participation needs, and local network nuances that affect your team.
Compare total cost of care, not just premiums and deductibles
Model total cost using premiums, expected utilization, copays, deductibles, coinsurance, pharmacy tiers, and network performance. This reveals true year-round costs and avoids mid-year surprises.
Leverage the SHOP Marketplace where eligible
Where available, SHOP offers standardized choices and may make you eligible for the Small Business Health Care Tax Credit. Confirm eligibility, then use SHOP quotes alongside carrier tools to compare the same metrics.
- Step-by-step way: shortlist plans, validate networks, model total cost scenarios, confirm compliance and contribution strategy, then finalize with agent support.
- Check network fit: confirm key doctors, hospitals, and specialists are in-network for your staff.
- Factor services like integrated pharmacy benefits and value-based programs that can reduce long-term cost.
“Combine digital quoting platforms with agent expertise to turn data into a confident purchasing decision.”
Strategies to reduce premiums and out-of-pocket costs while improving care
Adopt benefit designs that combine navigation, value-based networks, and drug management to protect budgets and boost outcomes.
Value-based care and centers of excellence to improve outcomes
Value-based models align provider payments with quality and coordination. BCBS’s Total Care approach uses ACOs and PCMHs to reward better outcomes and lower utilization.
Directing members to Blue Distinction Centers of Excellence for complex surgery reduces complications and shortens recovery. That lowers claims and can cut premium pressure over time.
Integrated pharmacy benefits to manage Rx spend
Linking pharmacy and medical data helps spot high-cost drugs and steer to equally effective, lower-cost therapies. This improves adherence and reduces avoidable admissions.
UnitedHealthcare’s Vital Medication Program eliminates out-of-pocket costs for key meds like insulin and naloxone, which removes a financial barrier and raises adherence.
Whole-person benefits: wellness, behavioral health, and virtual care
Offer wellness incentives, behavioral services, and 24/7 virtual visits to prevent costly episodes and keep staff productive.
Use navigation and advocacy to guide members to high-value providers. Measure savings with claims analytics and engagement metrics, then reinvest gains to refine plan design each renewal.
“High-performance networks plus active navigation help companies deliver better care while managing premium and pocket costs.”
Affordable health insurance for employees: steps to finalize your choice
Turn planning into action. Start by confirming your budget, final employee classes (full-time, part-time, location-based), and contribution rules that meet affordability goals and internal equity.
Choose a funding model that fits risk tolerance: fully insured, level-funded, or self-funded. Consider alternatives like ICHRA, QSEHRA, or a GCHRA if you want class-based allowances and more choice.
Pick carriers, networks, and admin support
Select carriers with the network access your team needs. UnitedHealthcare and BCBS both offer broad portfolios—UHC supports selection via its digital store and live agent help, while BCBS provides national PPO access (BlueCard) and payment integrity to reduce billing errors.
Validate administration: carrier-managed claims, integrated pharmacy, care management, and payment integrity reduce headaches at launch and cut erroneous payments.
Finalize implementation and renewal rhythm
Use SHOP quotes if eligible to access standardized group options and potential tax credits. If not, compare carrier tools and licensed agents to complete purchase quickly.
- Coordinate enrollments, virtual meetings, and member education before the effective date.
- Create clear timelines and FAQ materials so employees know next steps.
- Set a renewal and analytics cadence to track utilization, total cost of care, and satisfaction at the end of each year.
“Confirm network fit, secure administration, and communicate clearly to ensure a smooth rollout and strong member experience.”
For practical guidance on designing benefits that meet employee needs, review this employer resource at employee benefits guidance.
Conclusion
,Wrap up your review by weighing predictable premiums against total cost and member experience. Aim for a path that saves money over the year, not just a low sticker price.
Remember: BCBS’s network performance can lower total care costs (Milliman cites about 7% on average), while UnitedHealthcare offers broad small business tools — fully insured, level-funded, Surest models, and digital shopping with licensed agent support.
Consider HRAs, SHOP access for tax credits if eligible, and other options that suit your risk tolerance. Validate networks, model total costs, and confirm affordability before you buy.
Take action now: assemble your data, shortlist carriers and designs, check network fit and affordability, then move forward with a structured rollout and enrolment plan.
FAQ
What plan types should small businesses compare when choosing coverage?
Compare fully insured, level-funded, and self-funded plans. Fully insured plans offer predictable premiums and carrier-managed claims. Level-funded plans combine fixed monthly payments with potential year-end surplus if claims are low. Self-funded plans give employers more administrative control and cash-flow benefits but require stop-loss protection to manage large claims. Also evaluate network strategy — broad PPOs versus narrow or high-performance networks — and total cost of care, not just premiums and deductibles.
Who must offer minimum essential coverage under the Affordable Care Act?
Employers with 50 or more full-time equivalent workers are considered applicable large employers (ALEs) and must offer minimum essential coverage that is affordable and provides minimum value or face potential employer shared responsibility payments. Smaller employers are not required to offer group plans but can choose options like SHOP, ICHRA, or QSEHRA depending on workforce size and goals.
What is the SHOP Marketplace and how can it help my business?
The SHOP Marketplace helps eligible small employers compare carrier plans and may offer an easier enrollment path and consolidated billing. Some states still support SHOP options and it can be useful when you want a standardized platform to manage contributions and employee choice. Check state availability and carrier participation, and work with a licensed agent for plan comparisons.
How does the Small Business Health Care Tax Credit work?
The tax credit is available to small employers who pay at least half of employee premium costs, have fewer than 25 full-time equivalent employees, and meet average wage limits. The credit amount depends on payroll and contribution levels and can reduce your federal tax liability. Consult a tax advisor or payroll provider to confirm eligibility and calculate the actual benefit.
What is an ICHRA and when should an employer use it?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) lets employers reimburse employees tax-free for individual-market premiums and eligible out-of-pocket costs. It works well for firms that want flexible per-employee budgets or to shift administrative burden to individual plans. Employers must design classes, set uniform rules per class, and ensure reimbursements follow IRS and DOL guidance.
How does a QSEHRA differ from an ICHRA?
A Qualified Small Employer HRA (QSEHRA) is for employers with fewer than 50 full-time equivalents and has IRS-set contribution limits. It reimburses qualifying medical expenses, including individual premiums, up to the annual cap. Unlike ICHRA, QSEHRA has fixed maximums and simpler compliance rules but offers less flexibility for varied budgets across employee classes.
Can employers combine group plans with stipends or HRAs?
Yes. Employers often combine a core group plan with supplemental offerings like a GCHRA to offset high-deductible plan costs, or a stipend for ancillary benefits. Keep in mind tax and ACA compliance: stipends are generally taxable and may not meet minimum essential coverage requirements, while HRAs must follow specific rules to remain tax-advantaged and non-discriminatory.
What steps should I take to assess my team’s needs before buying coverage?
Start by surveying employee demographics, utilization patterns, and priorities such as prescription access, mental health, or virtual care. Set a budget and risk tolerance, define contribution classes, and model scenarios for premium and out-of-pocket costs. Use carrier quoting tools and work with a licensed agent or broker to compare plan designs and projected total cost of care.
How can employers reduce premiums and out-of-pocket costs without lowering quality of care?
Consider value-based care arrangements, centers of excellence for complex procedures, and integrated pharmacy benefit management to lower overall spend. Add whole-person programs like behavioral health and chronic care management to improve outcomes. Narrow network options can lower premiums, but balance access and employee satisfaction when choosing networks.
What is stop-loss insurance and why is it important for self-funded plans?
Stop-loss insurance protects employers that self-fund against unusually high individual or aggregate claims. It reimburses costs above set thresholds, limiting downside financial exposure. Proper stop-loss placement is essential when taking on claims risk to prevent catastrophic losses and stabilize plan finances.
How do I evaluate total cost of care versus just premiums?
Total cost of care includes premiums, employer and employee contributions, deductibles, copays, coinsurance, network savings, and expected utilization. Analyze historical claims data if available, estimate likely out-of-pocket exposure for typical employee scenarios, and factor in pharmacy spend and administrative fees. This gives a fuller picture than comparing premium rates alone.
Should small businesses use licensed agents or carriers directly when shopping for plans?
Licensed agents and brokers offer expertise in plan design, market options, and vendor negotiation. Carriers may provide direct quoting but can lack independent comparison. Agents can model scenarios, explain tax implications like the Small Business Health Care Tax Credit, and coordinate enrollment, making them valuable for many small employers.
What role do networks play in cost and access decisions?
Network choice affects premiums, provider access, and out-of-pocket costs. Broad PPO networks maximize provider choice but usually carry higher premiums. Narrow or high-performance networks limit provider options but can reduce costs and steer patients to high-value providers. Evaluate employee location, specialist needs, and continuity of care when choosing networks.
How can integrated pharmacy benefits help control drug spending?
Integrated pharmacy benefits align medication management with medical care, use formularies and prior authorization to favor cost-effective therapies, and employ rebates and specialty drug strategies. These measures reduce total cost of care and improve outcomes by managing adherence and preventing costly complications.
What administrative support should employers expect when implementing a new plan?
Expect assistance with employee communications, enrollment platforms, billing, eligibility tracking, and compliance reporting. Many carriers and third-party administrators provide onboarding, call-center support, and online portals. Choose vendors with strong implementation experience to ensure a smooth rollout and high participation.
How do wellness and behavioral programs affect plan performance?
Wellness and behavioral health programs can lower long-term costs by improving chronic disease management, reducing absenteeism, and increasing productivity. Programs like coaching, teletherapy, and preventive screenings can improve clinical outcomes and help control claims growth when integrated with medical plan design.
Are there options to help employees with high deductibles?
Yes. Employers can offer a GCHRA paired with a high-deductible health plan to reimburse deductible expenses, provide voluntary supplemental plans, or contribute to health savings accounts (HSAs). These approaches lower employee pocket costs while keeping premiums down, but require clear design and communication to maintain compliance.
What compliance issues should employers monitor when offering benefit alternatives?
Track ACA employer mandate requirements, nondiscrimination rules, ERISA implications, IRS limits for HRAs and HSAs, and Department of Labor guidance. When using HRAs, verify that plan design meets notice and documentation rules. Consult legal or benefits counsel to ensure your offerings remain compliant as rules evolve.