Health insurance for small businesses: your options

Do small businesses have to offer health insurance?

No, not under federal law if you're small. The IRS says the employer mandate applies only to applicable large employers: those with an average of at least 50 full-time employees, including full-time equivalents, in the prior calendar year. The IRS notes most employers fall below that line.

A large employer can owe a payment only if at least one full-time employee gets a premium tax credit on the Marketplace. Growing toward 50? Track your full-time equivalent count each year with your payroll provider or accountant.

Your main options compared

More on each: QSEHRA, ICHRA, ICHRA vs QSEHRA, and group health insurance.

The Small Business Health Care Tax Credit

The IRS credit can cover up to 50% of the premiums you pay (35% for tax-exempt employers) for 2 consecutive tax years. To qualify, the IRS says you must:

• Have fewer than 25 full-time equivalent employees (owners and their family members don't count).
• Pay average annual wages below the yearly limit. For 2026, the credit starts shrinking above $34,100 and is gone at $68,200, under IRS Rev. Proc. 2025-32.
• Pay at least 50% of the cost of employee-only coverage for each employee.
• Offer a qualified health plan through the SHOP Marketplace, or meet a limited exception.

The credit also shrinks once you have more than 10 full-time equivalents. You figure it on IRS Form 8941. Ask your accountant to run it before you choose a plan.

Health stipends: what to avoid

Paying or reimbursing employees' individual health insurance premiums outside a QSEHRA or ICHRA is risky. The IRS says these "employer payment plans" are group health plans subject to ACA market rules. An arrangement that fails those rules may trigger a $100 a day excise tax per affected employee ($36,500 a year each).

The IRS says an arrangement where employees can take the amount as cash compensation generally isn't an employer payment plan. A plain, taxable raise that isn't tied to buying insurance is the usual alternative. See health insurance stipend and check the design with a benefits attorney.

How to choose, step by step

1. Count full-time equivalents. Under 25 may open the tax credit; under 50 opens a QSEHRA and means no mandate.
2. Set a monthly budget per employee. Compare it with the QSEHRA cap.
3. Look at your team. Many employees on a spouse's plan or on Medicare can change which option fits.
4. Price a group plan and an HRA side by side with a SHOP-registered broker or benefits advisor.
5. Time it. Group plans can start any time of year. HRAs line up best with a January 1 start and Marketplace Open Enrollment, which HealthCare.gov lists as November 1 to January 15. HRA notices are due 90 days before the plan year.

Where Gabriel fits

If your employees buy individual plans, Gabriel can quote Marketplace plans for their ZIP code and household and open their own application with a licensed agent in most states. Owners without employees can start with self-employed health insurance. Employers with 25 or more employees can add Gabriel for Teams, a care membership, alongside a health plan. It is not group health insurance and not an HRA or ICHRA, it doesn't replace a health plan, and it never satisfies the ACA employer mandate.

Gabriel is not an insurer, and Gabriel membership doesn't count as minimum essential coverage. Health insurance quotes and enrollment are handled by Gabriel Labs, Gabriel's separately licensed insurance agency. This page is general information, not tax or legal advice.