The short version
- You generally need at least one W-2 employee who isn't you or your spouse. Some states and carriers require two.
- You're not required to offer coverage until you have 50+ full-time-equivalent employees.
- From November 15 to December 15, carriers waive participation and contribution minimums for January 1 plans.
Who counts as an employee
Carriers look at your W-2 employees on payroll. 1099 contractors don't count and generally can't join the plan. An owner and spouse alone don't make a "group," though once you have an eligible employee, you can both usually join.
The two rules that stop most applications
Minimum participation
Carriers often require a certain percentage of eligible employees, commonly around 70%, to enroll. Employees who decline because they have other coverage (like a spouse's plan or Medicare) usually don't count against you. Rules vary by carrier and state.
Minimum employer contribution
Most carriers require you to pay at least part of employee-only premiums, often 50%. You're not usually required to contribute toward dependents.
The workaround: during the November 15–December 15 window each year, small employers can buy a group plan without meeting these minimums, with coverage starting January 1. That window is open right now if you're reading this in late fall.
Your plan options
| Option | How it works | Good fit when |
|---|---|---|
| Fully insured group plan | Traditional plan with fixed monthly premiums | You want simplicity and predictable costs |
| Level-funded plan | Fixed monthly cost with a possible refund if claims are low | Your team is relatively healthy, usually 5+ employees |
| ICHRA | You give each employee a tax-free allowance to buy their own individual plan | Your team is spread across states, or participation rules are a problem |
| QSEHRA | Tax-free reimbursement for individual premiums, with annual caps | Fewer than 50 employees and a tight budget |
Tax benefits
- Employer contributions are generally tax-deductible business expenses.
- Employee premiums can be paid pre-tax through a Section 125 plan, which also reduces payroll taxes.
- The Small Business Health Care Tax Credit can cover up to 50% of your premium contributions for two consecutive years if you have fewer than 25 full-time-equivalent employees, pay average wages under the IRS limit, cover at least 50% of employee premiums and buy through the SHOP marketplace. SHOP availability varies by state.
Why it's worth it
Health benefits are one of the strongest tools a small business has to hire and keep good people. For a lot of owners, getting their own family onto a group plan is also cheaper than buying individual coverage.
Frequently asked questions
How many employees do you need for group health insurance?
Generally one eligible employee besides the owner and spouse. Some states and carriers require two.
Are small businesses required to offer health insurance?
No. The employer mandate applies at 50+ full-time employees, including equivalents.
What is the November 15–December 15 window?
A yearly window when small employers can buy group coverage without meeting participation or contribution minimums.
Thinking about benefits for your team?
We'll compare group, level-funded and ICHRA options for your budget, at no cost to you.
Get a QuoteGeneral information only, not tax or legal advice. Group eligibility, participation rules and tax credit requirements vary by state and carrier. Talk to a tax professional about credits and deductions.