Small Business

How Does Small Business Health Insurance Work?

Updated on December 12, 2019


How does small business health insurance work?

There are four things every small business owner should know about how small business health insurance works.

  • Coverage is generally guaranteed issue
  • You need at least one employee to qualify
  • You must contribute toward employee premiums
  • And you can shop for coverage at any time of the year

Let’s look at each of these in more detail:


First, if you’re eligible for a small business health insurance plan, your coverage is generally guaranteed to be issued by the insurance company.

This means that you, your employees and dependents cannot be turned down for coverage based on pre-existing medical conditions.

All the eligible employees of your small business, and their eligible dependents, have the option to enroll in the new plan regardless of their medical condition.

Number of employees

Second, you may need to have at least one payroll employee in order to qualify for small business health insurance coverage.

That said, rules can vary from one state to another, and from one insurer to another. A licensed agent can help you understand if you qualify for coverage in your area.

Employee premiums

Third, you typically need to pay at least fifty percent of the monthly health insurance premiums for your employees.  The minimum percentage can also vary by state or insurance company.

You may also opt to contribute toward premiums for dependents.

Shop for health insurance coverage

Finally, as a small business owner, you can shop for health insurance coverage at any time of year. You don’t need to wait for a special open enrollment period.

Once you buy a plan, your premiums are generally locked in for a year. During the year, you can add new employees and dependents to the plan or drop coverage for people who no longer work for you.

At the end of the year you can typically renew your coverage or shop for a new plan.

To learn more about your small business health insurance options today, visit

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