Tennessee Small Business Health Insurance: Plans, Rules and Costs

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

Tennessee small business health insurance lets you offer coverage to your team through a small group plan, a level-funded plan or a health reimbursement arrangement that helps employees buy their own plans. Tennessee small group plans are regulated by the Tennessee Department of Commerce and Insurance, and Tennessee's continuation law applies to insured group plans of any size.

This guide covers Tennessee's small group rules, continuation coverage, costs and how to get started before the November 15 to December 15 enrollment window. Call 888-730-6031 for a free quote from a licensed agent.

Tennessee Small Group Rules

In Tennessee, a small employer for health insurance purposes has 1 to 50 eligible employees. Carriers generally need at least one W-2 employee who is not the owner or the owner's spouse.

Tennessee small group plans must cover the ACA essential health benefits. Carriers must accept every small employer that applies and can set rates only by employee age, rating area and tobacco use, not by health history. Nashville, Memphis, Knoxville and Chattanooga each sit in different rating areas.

Carriers usually set minimum participation and employer contribution rules. Those minimums are waived for applications made November 15 to December 15 for a January 1 start.

Options for Tennessee Employers

Option	How it works in Tennessee
Small group plan	One or more HMO, PPO or EPO plans from a carrier licensed in Tennessee.
Level-funded plan	A set monthly cost with possible refunds. Often fits healthy groups of 5 or more.
ICHRA	Employees buy individual plans on HealthCare.gov or off-exchange and get reimbursed tax-free.
QSEHRA	For fewer than 50 employees with no group plan. 2026 caps: $6,450 self-only, $13,100 family.
SHOP plan	Needed to claim the small business health care tax credit.

Tennessee Continuation Coverage (Mini-COBRA)

Tennessee's continuation law, Tennessee Code 56-7-2312, applies to insured group health plans regardless of how many people the employer has. Employers with 20 or more employees must also follow federal COBRA, which lasts longer.

An employee who was covered for at least 3 months before losing coverage can generally keep the group plan for the rest of that month plus 3 more months. The employee pays the full group premium in advance to the employer.

After a divorce or the employee's death, a spouse and dependents can keep coverage for the rest of the month plus up to 15 more months. Self-funded plans are not subject to Tennessee's insurance law, so check how your plan is funded.

What Small Group Health Insurance Costs in Tennessee

Small group premiums in Tennessee depend on employee ages, location, plan type and how many family members enroll. Nationally, KFF found an average 2025 premium of $9,211 a year for single coverage and $26,054 for family coverage at firms with 10 to 199 workers.

The only way to know your real price is a quote based on your employee census. See our guide to small business health insurance cost.

Small Business Open Enrollment in Tennessee

From November 15 to December 15, Tennessee small group carriers waive minimum participation and contribution rules for coverage that starts January 1. It is the easiest time for a small team to start a plan. Read more about small business open enrollment.

ICHRA in Tennessee

Tennessee employees with an ICHRA shop for individual plans on HealthCare.gov or directly with insurers. Allowances can differ by employee class, such as full-time, part-time or location, which helps when your team is spread across Middle, East and West Tennessee.

Compare an ICHRA with a group plan in our ICHRA vs QSEHRA vs group health insurance guide.

How to Start a Tennessee Small Group Plan

• Gather your EIN and a recent payroll or state wage report.
• Build an employee census with dates of birth and ZIP codes.
• Decide your budget and what share of premiums you will pay.
• Compare plans, networks and hospitals your team uses.
• Submit the application and first premium before the carrier deadline.

Tax Breaks for Tennessee Small Businesses

Premiums you pay for employees are generally deductible. Employers with fewer than 25 full-time equivalent employees and modest average wages may qualify for the small business health care tax credit, worth up to 50% of premiums for two years.

Tennessee Small Business Health Insurance: FAQ

How many employees do I need for group health insurance in Tennessee?

1 to 50 eligible employees. Most carriers need at least one W-2 employee who is not the owner or the owner's spouse.

Are Tennessee employers required to offer health insurance?

No. Only federal ACA rules for employers with 50 or more full-time employees, including equivalents, apply.

Does Tennessee have mini-COBRA?

Yes. Tennessee continuation applies to insured group plans of any size. It generally lasts the rest of the month plus 3 months, or up to 15 months for a spouse after divorce or death.

Can Tennessee employers use an ICHRA?

Yes. Employees buy individual plans through HealthCare.gov or directly from insurers.

When can a Tennessee small business enroll?

Any month if you meet carrier rules, or November 15 to December 15 without participation and contribution minimums.

Next Steps for Tennessee small business health insurance

Start with a headcount, a budget and a census. Then compare a Tennessee small group plan with an ICHRA or QSEHRA. For the national 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. Tennessee Code 56-7-2312 (Justia)
2. HealthCare.gov: Small businesses
3. KFF 2025 Employer Health Benefits Survey

Related Guides

• Small business health insurance
• Tennessee health insurance
• Small business open enrollment
• Tennessee open enrollment

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.