Are Group Health Insurance Plans Really Cheaper for Small Business Owners? Here’s the Truth

With all the upcoming changes in health insurance, I’ve been getting a lot of questions from business owners about group health insurance plans. Many assume group coverage will save them money compared to individual health insurance, but the truth may surprise you.

Let’s clear up some misconceptions and help you make an informed decision.

Why Do People Think Group Plans Are Cheaper?

If you previously worked for a large employer, your cost for health insurance was likely very low—sometimes as little as $30 per month! But here’s why:

✔ Large employers are required to pay at least 50% of the cost of the lowest-priced plan they offer.

✔ Many big companies contribute far more than that—sometimes covering the majority of your premium.

✔ When you only see what came out of your paycheck, it’s easy to think the cost was low.

But when you leave an employer and start your own business, things change. You’re now the employer—and you’re paying 100% of your own premium plus contributing toward your employees’ coverage.

The Reality for Small Business Owners

If your group is small—just you and your spouse, or a few employees—group health insurance is rarely cheaper than an individual plan. Here’s why:

✔ For groups under 5 employees, premiums are typically age-rated (based on each person’s age).

✔ You must pay at least 50% of your employees’ premiums on top of your own full premium.

✔ Participation rules require 80% of employees to enroll, unless they have other coverage.

Example:

If you have 5 employees, you’ll pay 100% of your own premium PLUS 50% of the premium for at least 3 other employees. That adds up quickly—much more than what you’d pay on an individual plan.

Are There Any Advantages to Group Coverage?

Yes. Group plans often offer larger provider networks, and sometimes you can get PPO options, which are rare on the Marketplace. If that flexibility is a priority for you—and cost isn’t the main concern—group coverage might make sense.

What Should You Do Next?

With the 2026 Open Enrollment season coming soon and major healthcare changes expected, now is the time to explore your options. Group coverage may not be cheaper—but for some businesses, it’s worth considering.

I’ll have updated plan details by late October, so if you’re curious about group plans or want to compare them to individual options, get on my calendar now. We’ll review your goals, budget, and needs to find the best solution for your business.

✅ Schedule your appointment today at jkappconsulting.com.