--- title: Small Business Health Insurance Requirements description: Discover how to navigate small business health insurance requirements, understand regulations, and explore benefits and alternatives for your employees. image: https://blog.axcethr.com/hubfs/are%20you%20required%20to%20offer%20health%20insurance%20at%20your%20small%20business%20(1).jpg --- - [Client Portal](https://www.axcethr.com/client-services/) - [Employee Login](https://www.axcethr.com/client-services/) [![AxcetHR Solutions Blog](https://blog.axcethr.com/hubfs/AxcetHR2021%20Blog/axcethr_logo_white%20(1).png)](https://www.axcethr.com/) - [About Us](https://www.axcethr.com/about-us/) - [Corporate Philantropy](https://www.axcethr.com/about-us/corporate-philanthropy/) - [Meet the Team](https://www.axcethr.com/about-us/meet-the-team/) - [Values and Culture](https://www.axcethr.com/about-us/values-and-culture/) - [Kansas PEO](https://www.axcethr.com/about-us/kansas-peo/) - [Missouri PEO](https://www.axcethr.com/about-us/missouri-peo/) - 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[Human Resources](https://blog.axcethr.com/topic/human-resources) - [Payroll Administration](https://blog.axcethr.com/topic/payroll-administration) - [Employee Safety & Risk Management](https://blog.axcethr.com/topic/employee-safety-risk-management) - [Employee Benefits](https://blog.axcethr.com/topic/employee-benefits) - [All about COVID-19 in the Workplace](https://blog.axcethr.com/topic/covid19) - [Kansas & Missouri HR News](https://blog.axcethr.com/topic/kansas-and-missouri-hr-news) - [Kansas City Interest News](https://blog.axcethr.com/topic/kansas-city-interest-news) - [PEO/HRO](https://blog.axcethr.com/topic/peo) - Choose Topic: - [Human Resources](https://blog.axcethr.com/topic/human-resources) - Payroll Administrations - [Employee Safety & Risk Management](https://blog.axcethr.com/topic/employee-safety-risk-management) - [Employee Benefits](https://blog.axcethr.com/topic/employee-benefits) - [PEO](https://blog.axcethr.com/topic/peo) # How to Meet Small Business Health Insurance Requirements Effectively By [Mariah Collins, SHRM-SCP](https://blog.axcethr.com/author/mariah-collins) on [May 20, 2024](https://blog.axcethr.com/should-your-small-business-offer-health-insurance) 5 min read [1 Comment](https://blog.axcethr.com/should-your-small-business-offer-health-insurance#comments-listing) Share this: - - - - [whatsapp://send?text=https://blog.axcethr.com/should-your-small-business-offer-health-insurance](whatsapp://send?text=https://blog.axcethr.com/should-your-small-business-offer-health-insurance) - [mailto:?subject=Small%20Business%20Health%20Insurance%20Requirements&body=https://blog.axcethr.com/should-your-small-business-offer-health-insurance](mailto:?subject=Small%20Business%20Health%20Insurance%20Requirements&body=https://blog.axcethr.com/should-your-small-business-offer-health-insurance) ![small business health insurance](https://blog.axcethr.com/hs-fs/hubfs/small%20business%20health%20insurance.jpg?width=1200&name=small%20business%20health%20insurance.jpg) Keeping up with federal and state laws regarding small business health insurance requirements can be challenging for many companies. Whether your business is brand new or you’re an established company re-examining your benefits offerings, one of the first questions entrepreneurs face is “Do small businesses have to offer health insurance?” and if not, should they offer it anyway? ## Does a Small Business Have to Offer Health Insurance? The Affordable Care Act (“ACA”) is the most important regulation to cover in the discussion of small business health insurance requirements. Under the guidelines of the ACA, businesses with at least 50 full-time employees or a part-time equivalent must offer health insurance.  Small businesses with fewer than 50 full-time employees are exempt from this requirement. However, it is common for companies not legally mandated to provide health insurance to offer it voluntarily. ## Benefits of Offering Health Insurance to Employees According to the **[KFF Employer Health Benefits Survey (2023)](https://www.kff.org/report-section/ehbs-2023-section-14-employer-opinions-about-offering-health-benefits/)**, most employers who offer health insurance do so because it helps them **attract and retain high-quality employees**, supports overall **employee well-being**, and strengthens **productivity and morale**. Small employers in particular report that providing health coverage is both a competitive necessity and, in many cases, **simply the right thing to do** for their workforce. The data underscores that salary alone is not the deciding factor for most job seekers. Employees place significant value on a strong overall benefits package — including paid time off, retirement contributions and employer-sponsored health insurance — when evaluating job opportunities. With larger companies having more resources to offer comprehensive benefits, small businesses often need comparable offerings to compete for talent. The benefits of offering health insurance are clear, which makes the question less about “Do small businesses have to offer health insurance?” and more about “Should small businesses offer health insurance?” For many small businesses, partnering with a [professional employer organization (PEO](https://www.axcethr.com/why-axcet/about-peos/)) is the most effective way to provide high-quality, affordable health insurance options without bearing the full cost or administrative burden alone. RELATED: [A Three-Step Guide to Shopping for Small Business Health Insurance >>](https://blog.axcethr.com/a-three-step-guide-to-shopping-for-small-business-health-insurance) ## Partnering with a PEO to Meet Small Business Health Insurance Requirements Axcet HR Solutions, a Kansas City PEO, assists clients with obtaining the best coverage at the most affordable rates. We act as a co-employer to our clients and can handle all aspects of [employee benefits](https://www.axcethr.com/services/employee-benefits/). This includes negotiating for competitive health insurance rates that enable our clients to attract highly skilled applicants who may not have considered working for a smaller employer. Here is how it works: As a [certified PEO](https://www.axcethr.com/why-axcet/certified-peo/) and co-employer, we negotiate for health care benefits on behalf of all our clients at the same time. For example, assume we had 100 clients with 50 employees each. That means we would bring the large-group bargaining power of 5,000 employees to our negotiations with health insurance carriers. Higher numbers of employees covered mean lower rates for employees and employers alike — one of the key advantages of [PEO insurance](https://blog.axcethr.com/peo-insurance) for small businesses. [![Small Businesses Health Insurance and the PEO Option](https://no-cache.hubspot.com/cta/default/2652187/2464a529-02f7-44b9-af7a-8ba9e2a64257.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/2464a529-02f7-44b9-af7a-8ba9e2a64257) ## Benefits of Offering Health Insurance to Employees  The benefits of offering health insurance to employees go beyond competing with larger businesses for talent. Here are several other factors to consider: - ### Tax Deductions Companies can deduct contributions toward employee health insurance from their federal income tax return. Some small businesses also qualify for a tax credit if they meet certain Internal Revenue Service (IRS) requirements. - ### Employee Retention Health insurance is a major expense and consideration for most employees. The more attractive the benefit, the more likely they are to stay with the company long-term. - ### Employee Health & Productivity Employees with access to health insurance can remain proactive with chronic conditions like asthma or diabetes and receive prompt attention for sudden illnesses and injuries.  Healthier employees are more productive and take fewer sick days, leading to an improved bottom line for the employer. - ### Pre-Tax Benefits The IRS allows businesses to include company-sponsored health insurance as a pre-tax benefit, effectively lowering employee tax obligations. - ### Future-Proofing Your Business As your business grows, you’ll have already set the foundation for meeting small business health insurance requirements. Once small business owners decide to offer employee health insurance, they may not know where to turn to find it. A key advantage of working with a [certified PEO](https://blog.axcethr.com/certified-peos-what-are-they-and-why-does-certification-mattereo) like Axcet is that our [experienced benefits professionals](https://www.axcethr.com/expertise/) understand the health insurance marketplace and can work with you to source the best benefits offerings for your company and its employees. [![New call-to-action](https://no-cache.hubspot.com/cta/default/2652187/5d7c10a9-aa2c-40da-ac9e-defab151c95a.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/5d7c10a9-aa2c-40da-ac9e-defab151c95a) ## Alternatives to Health Insurance for Small Businesses Now that you’re familiar with basic small business health insurance requirements and the benefits of offering health insurance to employees, you may be wondering what the alternatives may be to traditional health insurance plans.  ### Broker or state marketplace First, employers are always free to purchase health insurance themselves through a broker or their state marketplace. Most insurance providers require an employee participation rate of at least 50% before they will agree to sell a group plan. Benefits of this option include employer tax incentives and guaranteed coverage regardless of employees’ health status. The biggest drawback is that the cost is unaffordable for most small companies. They are also subject to unpredictable premium increases and generally do not have flexibility with plan offerings. ### Self-funded plan Establishing a self-funded plan is another option. Employers establish a separate fund and pay employee healthcare claims themselves rather than going through an insurance carrier. Businesses that opt for a self-funded plan benefit from not paying state-mandated health insurance premium taxes of up to three percent. They maintain control over the plan and can offer greater flexibility to employees due to the government imposing fewer regulations. On the downside, few small businesses can afford to take the chance of financing healthcare costs that can run into the hundreds of thousands of dollars for a major illness. A single catastrophic claim could force the company to file for bankruptcy. Businesses typically take out stop-loss insurance to cover catastrophic claims and may outsource claims processing to a third-party administrator. Companies need to carefully consider whether they can afford these added expenses. RELATED: [Small Business Health Insurance: How to Manage Costs >>](https://blog.axcethr.com/small-business-health-insurance-how-to-manage-costs) ## Why Partnering with a PEO for Employee Health Benefits Makes Sense Each of the above health insurance options has in common that employers must do all the work of obtaining and managing the plan. At Axcet, we’re proud to manage everything from benefits negotiation to administration. This is only a small portion of the [human resources services](https://www.axcethr.com/services/human-resources/) we provide. For more information about small business health insurance requirements or to find out how Axcet can help your company source affordable benefit offerings, visit our [employee benefits details](https://www.axcethr.com/services/employee-benefits/employee-benefits-details/) page. Our company invites small business owners in Kansas City and the surrounding communities to [schedule a consultation](https://www.axcethr.com/schedule-consultation/) to learn more about the advantages of a co-employment relationship. [![New call-to-action](https://no-cache.hubspot.com/cta/default/2652187/a32596fb-7822-4c00-b63b-2b0aae9c6020.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/a32596fb-7822-4c00-b63b-2b0aae9c6020) [![Mariah Collins, SHRM-SCP](https://blog.axcethr.com/hs-fs/hubfs/Mariah_DSC6768-Edit.jpg?width=80&height=80&name=Mariah_DSC6768-Edit.jpg)](https://blog.axcethr.com/author/mariah-collins) Written by #### [Mariah Collins, SHRM-SCP](https://blog.axcethr.com/author/mariah-collins) Mariah Collins, SHRM-SCP, is a Human Resources Consultant at Axcet HR Solutions, specializing in people management, process improvement, and project management. With a strong background in payroll, benefits, and employee relations, she brings over four years of experience in providing HR solutions to small businesses. Mariah holds a Bachelor of Business Administration in Human Resources from Emporia State University and is known for her expertise in helping businesses streamline HR processes while ensuring compliance. Her contributions to the Axcet blog reflect her deep understanding of HR challenges and her commitment to supporting small business owners. Read more [View all posts →](https://blog.axcethr.com/author/mariah-collins) ### Get HR Updates ### Table of Contents ### Related Resources - [services Small Business Health Insurance](https://www.axcethr.com/services/employee-benefits/) #### [Reasonable Accommodations: Real-Life Examples & Best Practices ![reasonable accommodations](https://blog.axcethr.com/hubfs/reasonable-accommodations-_1200-x-628-px_%20(1).webp)](https://blog.axcethr.com/what-are-reasonable-accommodations) #### [![return to work morale](https://blog.axcethr.com/hubfs/return-to-office-morale-_1200-x-628-px_%20(1).webp) Looking for Return to Office Morale Boosters? Here Are 7 Must-Haves](https://blog.axcethr.com/7-creative-return-to-office-morale-boosters) ## Let us know what you think... ![AxcetHR Blog](https://blog.axcethr.com/hubfs/AxcetHR2021%20Blog/axcethr_logo_white%20(1).png) - [Why Axcet](https://www.axcethr.com/why-axcet/) - [What We Stand For](https://www.axcethr.com/about-us/what-we-stand-for/) - [Expertise](https://www.axcethr.com/expertise/) - [Employee Benefits](https://www.axcethr.com/services/employee-benefits/) - [Human Resources](https://www.axcethr.com/services/human-resources/) - [Payroll Services](https://www.axcethr.com/services/payroll-and-tax-administration-services/) - [Risk Management](https://www.axcethr.com/services/workers-comp-and-employee-safety-risk-management/) - [Meet the Team](https://www.axcethr.com/about-us/meet-the-team/) - [Subscribe to Latest Resources](https://www.axcethr.com/subscribe-to-the-latest-resources/) - [Resource Library](https://www.axcethr.com/expertise/resource-library/) - [\[ Client Portal \]](https://www.axcethr.com/client-services/) - - - - - Search for: Copyright © 2023 Axcet HR Solutions – Kansas City's PEO Since 1988 | [Privacy Policy](https://www.axcethr.com/privacy-policy/) | [Terms and Conditions](https://www.axcethr.com/terms-conditions/) | [**Join our Team – Careers »**](https://axcethrsolutions.prismhr-hire.com/) 10975 Grandview Drive Suite 200, Corporate Woods Building 27, Overland Park, KS 66210 | Call us: 913-383-2999 *The IRS does not endorse any particular For more information on [certified professional employer organizations](https://www.axcethr.com/why-axcet/certified-peo/), go to [www.irs.gov](https://www.irs.gov).* Remove cookies ![](https://dc.ads.linkedin.com/collect/?pid=43031&fmt=gif) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Mariah Collins, SHRM-SCP", "url" : "https://blog.axcethr.com/author/mariah-collins" }, "dateModified" : "2025-12-02T22:20:39.256Z", "datePublished" : "2024-05-20T20:00:00.000Z", "headline" : "Small Business Health Insurance Requirements", "image" : [ "https://blog.axcethr.com/hubfs/are%20you%20required%20to%20offer%20health%20insurance%20at%20your%20small%20business%20(1).jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.axcethr.com/should-your-small-business-offer-health-insurance", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.axcethr.com/hubfs/_logo_axcethr_primary.png" }, "name" : "Axcet HR Solutions" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.axcethr.com/#organization", "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "US", "addressLocality" : "Kansas City", "addressRegion" : "MO" }, "aggregateRating" : { "@type" : "AggregateRating", "bestRating" : "5", "ratingValue" : "5", "reviewCount" : "100" }, "areaServed" : { "@type" : "Country", "name" : "United States" }, "award" : [ "IRS Certified Professional Employer Organization (CPEO)", "Award-Winning HR Solutions Provider", "SHRM Certified HR Professionals", "HRCI Certified HR Professionals" ], "contactPoint" : { "@type" : "ContactPoint", "areaServed" : "US", "availableLanguage" : "English", "contactType" : "Customer Service" }, "description" : "Award-winning Professional Employer Organization (PEO) providing comprehensive HR solutions, payroll services, employee benefits, and risk management to small and mid-sized businesses. 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Whether your business is brand new or you’re an established company re-examining your benefits offerings, one of the first questions entrepreneurs face is “Do small businesses have to offer health insurance?” and if not, should they offer it anyway? Does a Small Business Have to Offer Health Insurance? The Affordable Care Act (“ACA”) is the most important regulation to cover in the discussion of small business health insurance requirements. Under the guidelines of the ACA, businesses with at least 50 full-time employees or a part-time equivalent must offer health insurance. Small businesses with fewer than 50 full-time employees are exempt from this requirement. However, it is common for companies not legally mandated to provide health insurance to offer it voluntarily. Benefits of Offering Health Insurance to Employees According to the KFF Employer Health Benefits Survey (2023), most employers who offer health insurance do so because it helps them attract and retain high-quality employees, supports overall employee well-being, and strengthens productivity and morale. Small employers in particular report that providing health coverage is both a competitive necessity and, in many cases, simply the right thing to do for their workforce. The data underscores that salary alone is not the deciding factor for most job seekers. Employees place significant value on a strong overall benefits package — including paid time off, retirement contributions and employer-sponsored health insurance — when evaluating job opportunities. With larger companies having more resources to offer comprehensive benefits, small businesses often need comparable offerings to compete for talent. The benefits of offering health insurance are clear, which makes the question less about “Do small businesses have to offer health insurance?” and more about “Should small businesses offer health insurance?” For many small businesses, partnering with a professional employer organization (PEO) is the most effective way to provide high-quality, affordable health insurance options without bearing the full cost or administrative burden alone. RELATED: A Three-Step Guide to Shopping for Small Business Health Insurance >> Partnering with a PEO to Meet Small Business Health Insurance Requirements Axcet HR Solutions, a Kansas City PEO, assists clients with obtaining the best coverage at the most affordable rates. We act as a co-employer to our clients and can handle all aspects of employee benefits. This includes negotiating for competitive health insurance rates that enable our clients to attract highly skilled applicants who may not have considered working for a smaller employer. Here is how it works: As a certified PEO and co-employer, we negotiate for health care benefits on behalf of all our clients at the same time. For example, assume we had 100 clients with 50 employees each. That means we would bring the large-group bargaining power of 5,000 employees to our negotiations with health insurance carriers. Higher numbers of employees covered mean lower rates for employees and employers alike — one of the key advantages of PEO insurance for small businesses. Benefits of Offering Health Insurance to Employees The benefits of offering health insurance to employees go beyond competing with larger businesses for talent. Here are several other factors to consider: Tax Deductions Companies can deduct contributions toward employee health insurance from their federal income tax return. Some small businesses also qualify for a tax credit if they meet certain Internal Revenue Service (IRS) requirements. Employee Retention Health insurance is a major expense and consideration for most employees. The more attractive the benefit, the more likely they are to stay with the company long-term. Employee Health & Productivity Employees with access to health insurance can remain proactive with chronic conditions like asthma or diabetes and receive prompt attention for sudden illnesses and injuries. Healthier employees are more productive and take fewer sick days, leading to an improved bottom line for the employer. Pre-Tax Benefits The IRS allows businesses to include company-sponsored health insurance as a pre-tax benefit, effectively lowering employee tax obligations. Future-Proofing Your Business As your business grows, you’ll have already set the foundation for meeting small business health insurance requirements. Once small business owners decide to offer employee health insurance, they may not know where to turn to find it. A key advantage of working with a certified PEO like Axcet is that our experienced benefits professionals understand the health insurance marketplace and can work with you to source the best benefits offerings for your company and its employees. Alternatives to Health Insurance for Small Businesses Now that you’re familiar with basic small business health insurance requirements and the benefits of offering health insurance to employees, you may be wondering what the alternatives may be to traditional health insurance plans. Broker or state marketplace First, employers are always free to purchase health insurance themselves through a broker or their state marketplace. Most insurance providers require an employee participation rate of at least 50% before they will agree to sell a group plan. Benefits of this option include employer tax incentives and guaranteed coverage regardless of employees’ health status. The biggest drawback is that the cost is unaffordable for most small companies. They are also subject to unpredictable premium increases and generally do not have flexibility with plan offerings. Self-funded plan Establishing a self-funded plan is another option. Employers establish a separate fund and pay employee healthcare claims themselves rather than going through an insurance carrier. Businesses that opt for a self-funded plan benefit from not paying state-mandated health insurance premium taxes of up to three percent. They maintain control over the plan and can offer greater flexibility to employees due to the government imposing fewer regulations. On the downside, few small businesses can afford to take the chance of financing healthcare costs that can run into the hundreds of thousands of dollars for a major illness. A single catastrophic claim could force the company to file for bankruptcy. Businesses typically take out stop-loss insurance to cover catastrophic claims and may outsource claims processing to a third-party administrator. Companies need to carefully consider whether they can afford these added expenses. RELATED: Small Business Health Insurance: How to Manage Costs >> Why Partnering with a PEO for Employee Health Benefits Makes Sense Each of the above health insurance options has in common that employers must do all the work of obtaining and managing the plan. At Axcet, we’re proud to manage everything from benefits negotiation to administration. This is only a small portion of the human resources services we provide. For more information about small business health insurance requirements or to find out how Axcet can help your company source affordable benefit offerings, visit our employee benefits details page. Our company invites small business owners in Kansas City and the surrounding communities to schedule a consultation to learn more about the advantages of a co-employment relationship.", "author" : { "@id" : "https://blog.axcethr.com/author/mariah-collins#author", "@type" : "Person", "name" : "Mariah Collins, SHRM-SCP", "url" : "https://blog.axcethr.com/author/mariah-collins" }, "dateCreated" : "2024-05-20", "dateModified" : "2025-12-02", "datePublished" : "2024-05-20", "description" : "Keeping up with federal and state laws regarding small business health insurance requirements can be challenging for many companies. 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