Group health insurance for companies with 2 to 50 employees

It is written for owners, HR directors, and finance leads who are deciding how the company will fund health insurance for employees. It is not a consumer guide to buying a personal policy, not tax, legal, or insurance advice, and not an offer of coverage.

A company with fewer than 50 full-time employees, including full-time equivalents, is generally not an applicable large employer under the ACA and is not required to offer health coverage. Many still do, because a considered benefits program helps them hire and keep people. See Do employers under 50 have to offer health insurance?.

What a fully insured small-group plan is

In a fully insured small-group plan, the employer sponsors a group health policy. The company pays a premium to an insurance carrier, and the carrier takes the claims risk and pays covered benefits. Eligible employees may enroll and may pay a share of the premium, often through a Section 125 cafeteria plan.

That is a different structure from a defined-contribution reimbursement such as an ICHRA or a QSEHRA, where the employer sets an amount and the employee obtains individual coverage. It is also different from a level-funded arrangement, in which the employer typically funds expected claims, administration, and stop-loss with a fixed monthly amount and retains more responsibility for claims below the stop-loss attachment points.

A fully insured plan is the right answer for many companies in this size range. The work is to confirm that the group can be issued, that eligibility and participation rules can be met, and that the plan type and contribution fit the roster.

Who is in the small-group market

Federal law generally treats a small employer as one that employed an average of at least 1 but not more than 50 employees during the preceding calendar year. The Protecting Affordable Coverage for Employees Act amended that definition in section 1304(b) of the Affordable Care Act and section 2791(e) of the Public Health Service Act. States may expand the definition to employers with 1 to 100 employees. CMS describes that federal default and the state option, and it publishes a table of states that have notified it of an expansion. We will confirm the current definition that applies to your state rather than treat a published table as final.

The federal applicable-large-employer test, which uses full-time employees and full-time equivalents, is a related but separate count. We will count the group the way the market and the carrier expect, and we will run the IRS test separately when headcount is close to the 50-employee line.

This practice is built for employers with 2 to 50 employees. If your state treats groups of up to 100 as small, we will tell you which rules actually apply to the quote.

Participation and contribution requirements

Issuers in the small-group market may apply employer-contribution or group-participation rules as allowed under applicable state law. Those rules are not a single federal percentage. They vary by state and by carrier, and they can change. We will not print a "typical" rate on this page, because that figure would be invented.

Two official rules are worth knowing in advance:

1. If a small group cannot meet the contribution or participation rules that apply to the offering, federal regulations allow an issuer to restrict enrollment to an annual period that runs from November 15 through December 15. That window is also the period when the SHOP minimum participation rate does not have to be met.
2. For SHOP coverage specifically, HealthCare.gov generally requires that at least 70% of the employees you offer insurance to must enroll, or already have coverage from another source, with some states setting a different rate. HealthCare.gov also states there is no contribution requirement merely to offer SHOP coverage. A uniform employer contribution of at least 50% of the premium for employee-only coverage is, however, part of the qualifying arrangement for the Small Business Health Care Tax Credit.

We will check the current participation and contribution rules for your state and for each carrier before you announce an offer.

Plan types

Fully insured small-group coverage is issued in the same network designs HealthCare.gov describes: preferred provider organization (PPO), health maintenance organization (HMO), exclusive provider organization (EPO), and, in some markets, point-of-service (POS) plans.

• A PPO generally pays a higher share of costs when employees use providers in the plan's network, and it allows out-of-network care, usually at a higher cost, without a referral.
• An HMO generally limits coverage to care from doctors who work for or contract with the HMO, except in an emergency, and may require enrollees to live or work in a service area.
• An EPO generally covers services only if employees use doctors, specialists, or hospitals in the plan's network, except in an emergency.
• A POS plan generally costs less inside the network and requires a referral from a primary care doctor to see a specialist.

A high-deductible health plan (HDHP) can be paired with a health savings account (HSA) when the plan meets the IRS definition of an HDHP under Internal Revenue Code § 223. HealthCare.gov describes an HDHP as a plan with a higher deductible than a traditional plan, which can be combined with an HSA.

For calendar year 2026, IRS Revenue Procedure 2025-19 sets the HSA contribution limit at $4,400 for self-only coverage and $8,750 for family coverage. An HDHP must have an annual deductible of at least $1,700 (self-only) or $3,400 (family), and annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) may not exceed $8,500 or $17,000. For calendar year 2027, Revenue Procedure 2026-24 sets the contribution limits at $4,500 and $9,000, the minimum deductibles at $1,750 and $3,500, and the out-of-pocket limits at $8,700 and $17,400.

We will match plan type to how and where your people actually get care, including on a multi-state workforce.

Longer explainers on each design are here: group PPO plans, group HMO plans, group EPO and POS plans, HSA-qualified HDHPs, and small-group metal tiers. A single group plan options page lists every plan type we write about.

Comparing cost structures

Employers who search for affordable or lower-premium group coverage are usually comparing structures, not shopping a single advertised rate. A fully insured small-group plan, a SHOP policy (which is also generally the path to the Small Business Health Care Tax Credit when the employer is eligible), a level-funded plan where one can be issued, an HSA-qualified HDHP, or a defined contribution arrangement such as an ICHRA or a QSEHRA can each be the better fit for a given census. We will put the structures that actually apply on one proposal. We will not describe any of them as cheaper in the abstract, and we will not publish a typical premium on this page.

ACA rules that apply to small-group coverage

Non-grandfathered health insurance coverage in the small-group market is subject to federal market rules. The points below are the ones employers in this size range ask about most often.

These rules are why a fully insured small-group quote is built from the roster, ages, family tiers, and work locations, not from the group's claims history in the way a large-group or self-insured arrangement might be.

How a fully insured group plan compares with the other structures

Each of the structures below is a legitimate fit for some companies with 2 to 50 employees. The comparison is structural. It is not a claim that one design costs less.

• SHOP coverage is the ACA's Small Business Health Options Program. Some states run their own SHOP; others use the federally facilitated SHOP. SHOP is also generally the path to the Small Business Health Care Tax Credit for eligible employers with fewer than 25 full-time equivalent employees. A small-group policy issued outside SHOP can still be a sound group plan; it is simply not the credit's usual path.
• A level-funded plan uses a fixed monthly amount for expected claims, administration, and stop-loss. It is generally treated as a self-insured design that uses stop-loss, not as a fully insured policy. Availability depends on underwriting, participation, and state stop-loss rules. We will put both quotes on the table when both can actually be issued.
• An ICHRA lets the employer set a contribution that employees use for individual health coverage. Employers of any size may offer one. You may offer a traditional group plan to one class and an ICHRA to another, subject to the class-size rules. You may not offer the same class a choice between the two.
• A QSEHRA is a defined-contribution reimbursement for an eligible employer that is not an applicable large employer and that does not offer a group health plan to any employees. A group plan and a QSEHRA are not a pair. The side-by-side is on ICHRA vs QSEHRA.

If some of your people are part-time, eligibility can be written on purpose in the group plan, or you can use a part-time ICHRA class. See benefits for part-time staff.

Some employers also ask about association health plans, PEO-arranged coverage, or coverage for an LLC or a family business. Those are covered on their own pages, including the rules that decide whether a given arrangement can be issued.

When you can enroll, and how renewal works

A health insurance issuer in the group market must allow an employer to purchase coverage at any point during the year, subject to the November 15-December 15 restriction described above when contribution or participation rules are not met. That is different from individual-market Open Enrollment.

For a small-group enrollment received on the first through the fifteenth day of a month, coverage must become effective no later than the first day of the following month. For an enrollment received from the 16th through the end of the month, coverage must become effective no later than the first day of the second following month. A small employer may instead choose a later effective date within a quarter for which small-group rates are available.

Once a plan is in force, the useful renewal work happens 90 to 120 days before the plan year ends, so there is time to compare the renewal with the other structures above and to issue employee notices if you change designs. That working calendar, including the 90-day ICHRA and QSEHRA notice deadlines, is on the benefits renewal page. That calendar is a working guide, not a statutory timetable, except where a specific notice rule is cited.

Federal COBRA continuation generally applies to group health plans of employers with 20 or more employees, measured under Department of Labor rules. Companies under that line may still have state continuation rules. We will identify which regime appears to apply; counsel should confirm it.

How we run a quote

1. You send a roster, the states where people work, what you offer today, your contribution approach, and your renewal date if you have one.
2. We confirm whether the group sits in the small-group market in each relevant state, and we check participation, contribution, and waiting-period rules that will actually apply.
3. We compare a fully insured group plan, including SHOP when it is in play, with a level-funded plan where a contract can be issued, and with an ICHRA or a QSEHRA if a defined contribution is the cleaner fit. If the tax credit appears to be in reach, we will flag it for your tax advisor.
4. We help you implement: carrier setup, employee communications, enrollment, and the Section 125 payroll pieces, plus group life and disability or voluntary benefits if those belong in the same package.
5. We stay on the file for the next renewal, and for the year your headcount approaches the applicable large employer line.

Our agents are licensed in all 50 states. The firm is based in Tampa and works with Tampa Bay employers as well as companies with people in other states.

Named carriers and networks, including Florida Blue, UnitedHealthcare, and AvMed, are listed on the carriers and networks hub. How to check a group-plan network walks through a doctor lookup.