A family business can offer group health insurance. Spouses, parents, children, and other family members who work in the company are often the reason the owner starts the search. The product menu is the standard small-group menu. The facts that decide whether a given product can be issued are who is an owner, who is a common-law employee, and how family members are counted for SHOP, for issuer eligibility, and for a cafeteria plan.
This page should be read next to group health insurance for an LLC and coverage for 2 to 10 employees. The three questions usually arrive together.
What it is
In a typical family business, some people on the roster are owners, some are common-law employees, and some are both. A fully insured small-group plan, a SHOP plan, a level-funded plan, or a defined contribution HRA may be available, depending on those facts.
SHOP's employee test is the one official rule to know in advance. HealthCare.gov states that you must have at least one full-time equivalent employee other than owners, spouses, and family members of owners, and partners. A business made up only of the owner, the owner's spouse, family members, or partners does not qualify for SHOP. Off-SHOP issuers can set their own conditions; we will check them rather than assume that a family-only census can, or cannot, be written as a group.
Family members who are bona fide common-law employees can often be covered under a group plan that is issued to the company, subject to the plan's eligibility rules. Tax treatment still follows the owner rules on the LLC page when a family member is also a 2-percent S corporation shareholder or a partner. Cafeteria-plan nondiscrimination rules, already flagged on the Section 125 page, matter in a company whose eligible group is concentrated in an ownership family.
An ICHRA or a QSEHRA is an arrangement for employees, not for a self-employed owner or the spouse of a self-employed owner. It can still be the right design for the company's employees, including family members who are employees and who meet the arrangement's rules.
Who it fits
This page is for family-owned companies, including husband-and-wife shops, parent-and-child businesses, and multi-generation firms, that want a clean reading of what can be issued. It is written for employers with 2 to 50 employees and is also relevant as the family firm grows into a mid-size company.
If the only people on the census are owners and their spouses or family members, a group policy or SHOP may be unavailable, and individual coverage may be the path for those owners. If the company also has employees who are not owners or family members, the usual small-group and HRA menu opens up.
How it works for employers
You send a roster that identifies owners, family relationships, and common-law employees, plus the entity type and the states where people work. We confirm SHOP eligibility, issuer rules, and whether an HRA is the cleaner structure for some or all of the group. We will put dental and vision, life and disability, and a Section 125 plan on the same proposal when they belong there, and we will ask your tax advisor to confirm owner-premium reporting.
If the company may also qualify for the Small Business Health Care Tax Credit — generally, eligible employers with fewer than 25 full-time equivalent employees, through SHOP — we will flag that for your tax advisor. The SHOP employee test still has to be met first, so a family-only census will not reach the credit by that path.
How it compares
A family business uses the same structures as any other small employer: a group policy, SHOP, level-funded coverage, or a defined-contribution HRA. The difference is the eligibility overlay, not a special "family plan" product. We will not describe a family-owned company as automatically cheaper or more expensive to insure, and we will not invent a carrier rule that we have not checked.
To get a proposal built around your family's actual roster, request a proposal or call (813) 540-1299. Our agents are licensed in all 50 states. The firm is based in Tampa and works with Tampa Bay employers as well as family companies in other states. See also the group plan options page.Frequently asked questions
Can we put a spouse on the company's group plan?
If a group plan is issued and the spouse is an eligible employee or an eligible dependent under that plan, yes, subject to the plan's terms. Whether the company can get a group plan in the first place depends on the full roster, including SHOP's one-employee test.
Does a spouse or child who works in the business count toward SHOP eligibility?
HealthCare.gov excludes owners, spouses, and family members of owners, and partners, from the one-FTE-employee test. You need at least one FTE who is not in that group.
What if the only workers are family members?
SHOP will not be available under that test. Some off-SHOP products may also be unavailable. Individual coverage, sometimes with a reimbursement arrangement for any common-law employees who are eligible, may be the cleaner path. We will tell you what can be issued.
Can family members who are employees use a Section 125 plan?
Common-law employees may, when the Code allows it. Partners and 2-percent S corporation shareholders may not. Nondiscrimination rules should be reviewed when the eligible group is concentrated in an ownership family.
Is there a special family-business health plan?
No. The structures are the standard ones. The roster is what makes the analysis specific.
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