Small Business Health Insurance Cost: 2026 Averages Per Employee

By Michael Sprague, Licensed Health Insurance Agent · Reviewed by Heather Sprague, Licensed Health Insurance Agent

Small business health insurance costs about $768 a month per employee for single coverage and about $2,171 a month for family coverage, based on 2025 averages for firms with 10 to 199 workers. Your real price can be much higher or lower depending on location, ages and plan design.

This guide breaks down average premiums, how much employers usually pay, what drives your quote and practical ways to lower the bill. For a quote built on your own team, call 888-730-6031 or request a free quote.

Average Cost Per Employee

The KFF 2025 Employer Health Benefits Survey is the most cited benchmark. Here are the averages:

Coverage	Small firms (10 to 199 workers)	All firms
Single, per year	$9,211	$9,325
Single, per month	About $768	About $777
Family, per year	$26,054	$26,993
Family, per month	About $2,171	About $2,249

Premiums rose about 5% for single coverage and 6% for family coverage from 2024 to 2025. Many employers expect another increase in 2026.

How Much Do Employers Usually Pay?

Across all firms, covered workers paid 16% of the premium for single coverage and 26% for family coverage. Employers paid the rest. KFF also found that 29% of covered workers at firms with 10 to 199 workers had a plan where the employer paid the entire single premium.

Small firms are also more likely to require large family contributions. Many small employers pay a high share for the employee and a smaller share for dependents.

Outside the November 15 to December 15 window, most carriers expect you to pay at least 50% of the employee-only premium. During small business open enrollment, that minimum is waived.

What Drives Your Price

• Location. Prices vary by state and even by county.
• Employee ages. Small group premiums are age-rated. A 60-year-old can cost about three times as much as a 21-year-old.
• Plan type and level. PPOs cost more than HMOs or EPOs. Bronze and high-deductible plans cost less than gold or platinum.
• Who enrolls. Covering spouses and children raises the total sharply.
• Tobacco use. Some states allow a tobacco surcharge.
• Funding type. Level-funded plans may price based on the group's health.

Premiums by Plan Type

KFF's 2025 data shows how plan design changes premiums across all firms:

Plan type	Single premium	Family premium
High-deductible plan with savings option	$8,620	$25,379
All plans average	$9,325	$26,993
PPO	$9,818	$28,272

A high-deductible plan paired with a health savings account (HSA) can save money on premiums while giving employees a tax-free way to pay for care.

Deductibles and Out-of-Pocket Costs

Premium is only part of the cost. Small-firm workers with a deductible faced an average single deductible of $2,631 in 2025, compared with $1,670 at large firms. More than half of covered workers at small firms had a deductible of at least $2,000.

When comparing plans, look at the deductible, copays, coinsurance and out-of-pocket maximum. A cheaper premium can cost your team more if they use care often.

Cost of HRAs Compared With Group Plans

With an ICHRA or a QSEHRA, your cost is the allowance you set, plus a small administration fee. For 2026, QSEHRA allowances are capped at $6,450 a year for self-only and $13,100 for family coverage. ICHRAs have no federal cap.

For example, a business that offers a $400 monthly ICHRA allowance to 10 employees knows it will spend at most $48,000 a year, plus fees. Employees can pick richer or leaner plans and pay any difference.

Taxes Lower the Real Cost

Employer premiums are generally deductible as a business expense, and they are not taxable income to employees. Employees can pay their share pre-tax through a Section 125 plan. That cuts payroll taxes for both of you.

If you have fewer than 25 FTE employees and modest wages, the small business health care tax credit can cover up to 50% of the premiums you pay for two years.

Ways to Lower Small Business Health Insurance Costs

• Offer a base plan and let employees buy up to a richer plan.
• Pay a set dollar amount instead of a percentage of premium.
• Compare a level-funded plan if your group is healthy.
• Pair a high-deductible plan with an HSA contribution.
• Use an ICHRA or QSEHRA for a fixed, predictable budget.
• Add low-cost dental and hospital indemnity plans instead of richer medical coverage.
• Shop at every renewal. Prices and networks change each year.

Small Business Health Insurance Cost: FAQ

How much does health insurance cost per employee per month?

About $768 for single coverage and $2,171 for family coverage on average at small firms in 2025. Your quote depends on ages, location and plan.

Is small business health insurance cheaper than individual insurance?

Not always. Group and individual premiums are often similar. Individual plans may come with premium tax credits for lower-income employees, which is one reason HRAs have grown.

How much should an employer contribute?

Many carriers require at least 50% of the employee-only premium outside the yearly window. Many small employers pay 50% to 100% for the employee.

Why did my renewal go up?

Common reasons include medical inflation, employees getting older and changes in who enrolls. Shopping at renewal can help.

Are premiums tax deductible for the business?

Generally yes, as an ordinary business expense.

Next Steps for small business health insurance costs

Start with a monthly budget per employee, then compare a group plan, a level-funded plan and an HRA. Look at total cost, not just premium. For the full overview, see our guide to small business health insurance.

Want a licensed agent to help? Call 888-730-6031, Monday through Friday, 9 a.m. to 6 p.m. Eastern, or request a free quote.

Sources

1. KFF 2025 Employer Health Benefits Survey
2. IRS: Small Business Health Care Tax Credit
3. IRS: Revenue Procedure 2025-32

Related Guides

• Small business health insurance
• Small business health care tax credit
• ICHRA health insurance
• Health insurance cost per month

Vivna Insurance is a licensed independent agency, not a government website. Our help is free; we are paid by the insurance companies we work with. Coverage options, deadlines and costs vary by plan and state.