How to Get Health Insurance Through Your Business: A Step-by-Step Guide

Offering health insurance through your business isn’t just a valuable perk—it’s one of the most effective tools for recruiting top talent, reducing employee turnover, and lowering your tax burden.  

Whether you’re a solo entrepreneur running an LLC or leading a growing team, setting up employer-sponsored health coverage is far simpler than it seems. Here is a clear guide on how to evaluate your options, choose a plan, and get covered.  

Step 1: Check Your Business Structure & Eligibility

How you set up health insurance depends heavily on your company's workforce and legal structure:  

• Businesses with Employees (2–50 employees): Most states require at least two participants (often the owner plus at least one W-2 employee) to qualify for traditional Small Group Health Insurance. 1099 contractors generally do not count toward this threshold.  

• Sole Proprietors & Single-Member LLCs (No employees): You typically cannot buy a standard small-group policy. Instead, you purchase individual coverage through the Healthcare.gov Marketplace or directly from a carrier and deduct the premiums on your personal tax return.  

• S-Corporations: If you run an S-Corp, you can set up a plan as the sole employee, provided your premiums are properly reported as W-2 wages for tax deduction purposes.  

Step 2: Choose the Right Type of Coverage Model

Small business owners are no longer tied to just one traditional route. Today, you have four main ways to provide health benefits:

1. Traditional Group Health Insurance (HMO, PPO, EPO)

You select a plan from a major carrier (e.g., Blue Cross Blue Shield, UnitedHealthcare, Aetna) and contribute toward employee premiums.  

• Pros: Highly recognizable, familiar to employees, and offers robust network options.  

• Cons: High fixed monthly costs and strict carrier participation rules (often requiring 50–70% of staff to enroll).  

2. Individual Coverage HRA (ICHRA)

An ICHRA allows you to set a fixed monthly allowance for your employees. Employees choose their own individual health plans from the marketplace, and you reimburse them tax-free.  

• Pros: Predictable budget control, no participation minimums, and total flexibility for employees.  

• Cons: Employees must manage buying their own plans on the open market.  

3. Qualified Small Employer HRA (QSEHRA)

Designed specifically for businesses with fewer than 50 full-time employees who don't offer a group health plan. Like an ICHRA, it lets you reimburse employees tax-free up to annual IRS caps.  

4. SHOP Marketplace Plans

The Small Business Health Options Program (SHOP) is an official government portal to shop for small group coverage.  

• Bonus: Enrolling through SHOP is often the only way to claim the Small Business Health Care Tax Credit, which can refund up to 50% of your premium contributions if you have fewer than 25 employees with average wages below certain thresholds.  

Step 3: Determine Your Budget & Contribution Strategy

Before gathering quotes, establish what your business can afford month-to-month.

• Employer Contribution: To qualify for small-group coverage or the SHOP tax credit, employers generally pay at least 50% of the employee-only premium cost.  

• Cost Factor Considerations: Premium rates depend on employee age, business location (ZIP code), coverage tier (Bronze, Silver, Gold, Platinum), and network size.  

Step 4: Work with a Broker or Modern Benefits Platform

You don't need to navigate quotes on your own:

• Licensed Health Insurance Brokers: Working with a small-business broker is typically 100% free (they are paid commissions directly by insurance carriers). They will present side-by-side options from multiple providers.

• Online Benefits Platforms: Platforms like SimplyInsured, Gusto, or Take Command Health integrate directly with payroll to automate deductions, census tracking, and enrollment.

Step 5: Execute Enrollment & Onboarding

Once you select a plan tier and carrier:  

1.Gather Employee Data:

Collect names, dates of birth, home ZIP codes, and dependent details for all full-time W-2 workers.

2.Establish Eligible Waiting Periods:

Decide when new hires become eligible (e.g., first day of employment or after a 30-to-90-day probationary period).

3. Open Enrollment:

Distribute plan details to your team. Employees select their preferred plan or formally waive coverage if they are covered elsewhere (e.g., through a spouse).

4.Submit Documentation & First Payment:

Upload your business tax documents (e.g., Form 941 or Articles of Organization) and make the initial premium payment to bind coverage.

Key Tax Takeaways for Business Owners

Tax Deduction Note: Premium contributions made by employers toward group health plans or HRAs are generally 100% tax-deductible as a business expense. Additionally, employee contributions are made using pre-tax dollars via Section 125 payroll deductions, reducing payroll taxes for both the business and employees. 

Let us know if you need help getting your health insurance plan setup and added to your payroll

We are here to help you navigate through the process with ease!

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