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The Bottom Line
Blue Cross Blue Shield offers the most options for employers, with many plans providing access to the BlueCard PPO network and 24/7 telehealth, along with a variety of funding options in some states. If you’re looking for a self-funded plan, Aetna offers the best option tailored to small businesses in many states, as well as CVS benefits and optional robust behavioral health benefits. Kaiser Permanente takes the cake for customer satisfaction, with high third-party ratings and great digital tools, while UnitedHealthcare’s unique FlexWork program makes it our top pick for nontraditional employees.
Types of Health Insurance Companies for Small Businesses
You have a few options when choosing small business health insurance, according to Robert Slayton, owner of a Naperville, Illinois, employee benefits consulting firm called Robert Slayton & Associates.
Small Group Health Insurance
One option is to purchase a small group plan directly from a commercial health insurance company that serves small businesses or through a broker. “It gives the employer control over which plans to offer and [assurance] that people will remain covered while employed,” said Slayton. However, you may also need to offer COBRA or mini-COBRA plans. Mini-COBRA plans are required by some states for companies with fewer than 20 employees.
Self-Funded Plan
You may be able to save money by taking on the responsibility of paying out employee health claims yourself. This is known as a self-funded or self-insured plan, which typically relies on a commercial health insurer to administer the provider network and provide assistance with enrollment and claims processing.
Health Reimbursement Arrangement (HRA)
Another option is for the employer to offer a health reimbursement arrangement (HRA), which is an employer-funded group plan that pays employees back for qualified health expenses up to a certain dollar amount each year. Expenses may include premiums for an employer-sponsored plan, as well as copays and coinsurance.
There are several types of HRAs, including a qualified small employer HRA (QSEHRA) for companies with fewer than 50 full-time employees. Another type is an individual coverage HRA (ICHRA), which lets employees use the funds to buy their own health insurance with pretax dollars. Funds can also be used for copays and deductibles. “[Employers] choose an amount to give each employee so that the employee can purchase coverage on their own,” said Slayton. “Employees who claim this reimbursement must have an underlying individual plan or Medicare.”
SHOP Plan
The Small Business Health Insurance Options Program allows you to compare small business plans offered on the ACA Marketplace and offer one or multiple options to your employees. These plans are typically the only route to the Small Business Health Care Tax Credit. However, not all states have the same eligibility requirements so you will need to confirm the criteria if you have business in more than one state.
Pros & Cons of Health Insurance Companies for Small Businesses
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Access to PPO networks
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Wellness plans
Pros Explained
- Access to PPO networks: Insured employees will have access to discounts and other perks that come with being part of a PPO.
- Wellness plans: Insurance programs often include programs designed to incentivize health and wellness. This sometimes includes access to tools that can help with diet, exercise, or other health-related decisions.
Cons Explained
- Limited options: Businesses with fewer employees don’t always have the same number of options as larger operations with many employees.
Why You Should Trust Us
Investopedia analyzed health insurance providers on 27 criteria. We gathered data from state and federal insurance marketplace databases and websites as well as from the National Committee for Quality Assurance, which independently rates healthcare plans. We used this data to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best health insurance companies for small businesses since 2020.
Frequently Asked Questions
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The U.S. Small Business Administration Office of Advocacy defines a small business as an independent business with fewer than 500 employees. Total number of employees is just one way to measure a business’s size, however. According to the SBA, small businesses account for the vast majority of businesses in the U.S.
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If you employ fewer than 50 people full-time, you are not required to offer health insurance to your employees. But more than half of firms that size do offer it, according to the National Federation of Independent Business. A 2022 U.S. Chamber of Commerce survey found that 96% of employees rank health insurance as ‘extremely’ and ‘very’ important employer-provided benefit. If you have 50 or more employees and choose not to offer coverage that meets federal standards, you’ll be required to pay a penalty called a Shared Responsibility Payment instead.
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Costs vary by location and the network and coverage you choose, but on average, small businesses contributed $7,349 per single covered employee in 2023. Experts recommend keeping your total employee benefit costs between 10% to 20% of your overall revenue.
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A self-insured health plan is a type of group health insurance in which the employer collects premiums and is responsible for paying claims when employees need care. These plans can be self-administered, or the business may work with an insurance provider to get stop-loss coverage (which puts a ceiling on your risk) and administrative support.
There are several benefits to self-funded plans. Employers can keep surplus premiums (or receive a portion returned by the stop-loss carrier), plans can be customized to a greater degree, and certain ACA provisions that lead to high costs can be avoided. Increasingly, small businesses are opting for self-funded coverage. But self-insured plans aren’t right for every business.
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Yes. An S corp can provide health insurance for its employees. However, most health insurance companies require you to have at least two employees to get a group plan, so if you are an S corp owner and don’t have employees, you’ll need to get individual health insurance from the ACA Marketplace. Additionally, you can’t provide an HRA to anyone with a greater than 2% stake in your company.
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We researched and reviewed multiple insurers to find the best options you see above on this list. These are the companies we researched to help you learn more before making a decision: Aetna, Ambetter (Sunshine Health), Anthem, Blue Cross Blue Shield, Cigna, Kaiser Permanente, Molina Healthcare, Oscar, United Healthcare.
How We Chose the Best Health Insurance Companies for Small Businesses
We chose the best health insurance companies for small businesses by looking at our research for our list of the overall best health insurance companies and then investigating what options these insurers offer for small businesses looking to buy plans for their employees.
To identify which health insurance companies to review for our overall winners list, we analyzed business and market insight databases, considered health insurance company market share, and researched user-generated data from Google to determine public interest and trends in health insurance companies and plans.
We collected data from the National Committee for Quality Assurance (NCQA), an independent organization that rates healthcare plans on quality and patient satisfaction. We also gathered data from state and federal government insurance marketplace websites and databases, and directly from companies via websites, media contacts, and existing partnerships. The data collection process took place between Sept. 29 and Oct. 23, 2023.
We then developed a quantitative model that scores each health insurance provider based on 27 criteria that fall into four major categories and are crucial in evaluating the company’s offerings and benefits. We weighted the four categories as follows for this article:
- Plan Quality & Customer Satisfaction: 20%
- Plan Features: 40%
- Cost: 25%
- Availability: 15%
Read our full methodology for reviewing health insurance companies.
Guide to Health Insurance Companies for Small Businesses