Find out if your small business must offer health insurance in 2025. Learn the key rules, options, and smart tips to stay compliant and support your team.
Introduction
If you own a small business, you may be wondering whether you are required to offer health insurance to your employees. With rules, taxes, and changing laws, this topic can feel overwhelming. The good news is: we’re here to explain it all in plain English. In this blog post, we’ll cover what the law says, what your options are, and how offering health insurance can benefit both your business and your team.
1. What Counts as a Small Business?
In health insurance rules, a small business is usually defined as a company with fewer than 50 full-time employees. This number is important because many federal health insurance requirements begin at 50 or more employees. If your business has fewer than 50 workers, you are not legally required to offer health insurance—but you can still choose to.
2. Are Small Businesses Required to Offer Health Insurance?
No, most small businesses (those with fewer than 50 full-time employees) are not required by law to offer health insurance. However, if you do choose to offer coverage, there are some rules you’ll need to follow, such as offering it to all eligible employees and meeting basic coverage standards.
3. What Is the Employer Mandate?
The Employer Mandate is part of the Affordable Care Act (ACA). It requires businesses with 50 or more full-time employees to offer health insurance that meets certain standards or pay a penalty. If your business is under that limit, the mandate does not apply to you.
4. Benefits of Offering Health Insurance Anyway
Even if it’s not required, offering health insurance can help you attract and keep great employees. It shows you care about your team’s well-being and can improve morale. Plus, offering coverage can make your business more competitive in the job market.
5. Health Insurance Options for Small Businesses
Small businesses can buy health plans through the Small Business Health Options Program (SHOP) or from private insurance companies. SHOP is a government-run marketplace with plans designed specifically for small employers. You may also be able to work with a health insurance broker to find the right plan.
6. Can You Get a Tax Credit?
Yes, some small businesses qualify for a Small Business Health Care Tax Credit. This credit helps reduce the cost of offering health insurance. To qualify, you must have fewer than 25 full-time equivalent employees, pay average wages under a certain amount, and pay at least half of the premiums.
7. What to Include in a Small Business Health Plan
If you decide to offer health insurance, the plan should meet ACA minimum essential coverage standards. This usually includes things like doctor visits, emergency care, maternity care, and prescriptions. You can choose different plan levels (Bronze, Silver, Gold, or Platinum) depending on how much you want to pay and cover.
8. Offering Health Insurance to Part-Time Workers
You are not required to offer health insurance to part-time employees (those working less than 30 hours per week). However, some small businesses do offer coverage as a perk. Just be sure your policy is clear and consistent for all employees in similar roles.
9. Health Reimbursement Arrangements (HRAs)
If full group insurance is too expensive, consider a Health Reimbursement Arrangement. This lets you reimburse employees for some medical expenses or even individual health insurance premiums. It’s a flexible, affordable way to support your team’s health.
10. How to Choose the Right Plan for Your Business
Think about your budget, your employees’ needs, and what benefits will help you grow. You may want to talk to a broker, use an online comparison tool, or contact your local chamber of commerce for help. Choose a plan that’s simple to manage and adds value to your business.
FAQs About Small Business Health Insurance Requirements
Do small businesses have to offer health insurance in 2025?
No, if you have fewer than 50 full-time employees, you are not legally required to offer health insurance.
What is considered a full-time employee under the ACA?
A full-time employee is someone who works at least 30 hours per week on average.
Can I offer health insurance only to some employees?
Generally, if you offer health insurance, you must offer it to all full-time employees under similar terms.
What happens if I have 50 or more employees and don’t offer insurance?
You may face a penalty under the Employer Mandate. The IRS enforces this rule.
Can I get help paying for employee insurance?
Yes, the Small Business Health Care Tax Credit can help if you meet certain conditions like having low-wage employees and paying at least half the premium cost.
Conclusion
Health insurance requirements for small businesses can seem tricky, but they don’t have to be. Most small businesses are not required to offer insurance, but doing so can bring big benefits. If you’re considering offering coverage, start by exploring your options and finding a plan that fits your budget. Supporting your team’s health is one of the smartest investments you can make.