When considering the 5 best health insurance plans for small business owners, this guide prioritizes overall value to accommodate your focus on the bottom line as a self-employed business owner.
We will also take into account member benefits, the variety of plan options, and provider networks as additional factors to consider.
Disclaimer: Why “The Best” Plan is Different for Everybody
Prior to starting, it is crucial to bear in mind that no health insurance plan will be optimal or cost-effective for every individual. Selecting the “optimal plan” entails dedicating time to comprehend your financial requirements and health objectives. Subsequently, you should locate a credible advisor who can assist you without charge in evaluating your alternatives.
Do I Have to Have Health Insurance if I’m Self-Employed?
As an independent worker, you have the flexibility to create and execute your preferred healthcare approach without any obligation to possess any form of health insurance, including the option of not having one at all.
You won’t need to carry group insurance until you have a team of at least 50 employees, so there’s no need to worry if you’re in the process of hiring.
However, it is important to keep in mind that deciding not to have insurance ultimately results in greater expenses.
Coverage for Entrepreneurs
Enrolling through the Marketplace as a self-employed individual offers the opportunity to receive additional savings on your coverage. By opting for Marketplace coverage, you ensure guaranteed access to 10 essential health benefits accompanied by predetermined cost sharing.
By filling out a Marketplace application, you can ascertain if you are eligible for financial benefits such as premium tax credits or additional savings on out-of-pocket expenses. If you meet the requirements pertaining to income and other factors, the Marketplace will inform you whether you may be eligible for the Oregon Health Plan, Oregon’s Medicaid program. In any case, you will have access to excellent coverage that will assist in maintaining your well-being, allowing you to concentrate on the most significant aspects – your business.
Here are a few pointers to keep in mind:
- The Marketplace will ask you to estimate your net income for the current year. This can be hard to do when you’re self-employed. The Marketplace recommends doing your best to accurately estimate your income, based on past experience and realistic expectations.
- If it looks like your initial estimate was off as the year progresses, you should log in and report an income change. The Marketplace will recalculate your financial savings to make sure you’re getting as close to accurate amounts as possible. If you end up making more money and you don’t report a change, you may have to pay back some of the assistance you received throughout the year.
- When reporting self-employment income, you must report net income. This is your income minus expenses, sometimes also referred to as your profit. Net income for self-employment is reported on Schedule C of your federal tax return.
If required, it is recommended to upload a ledger containing a comprehensive breakdown of your self-employment earnings and costs to verify your income.
5 Health Plans for Entrepreneurs and Small Business Owners
Cigna Small Business: 8 Different Plan Options
Member benefits that stand out are:
Higher number of plan options than other companies on this list.
Despite not being available in all 50 states, Cigna is rapidly emerging as a top contender in the small business health insurance market. With a range of 8 distinct group health insurance plans, Cigna can customize them to cater to the needs of both small organizations (employing 1-50 individuals) and larger corporations (employing 50 or more individuals).
Cigna offers a variety of health plans for you to choose from.
- Open Access Plus (OAP): With the largest provider network and no referral requirements.
- LocalPlus: Employees have access to a more focused and limited provider network that is close to home.
- Cigna SureFit: A highly customizable plan where employees can make more detailed decisions about their coverage (Not available in all areas)
Humana Small Business: Unique Plans for Your Company’s Specific Healthcare Needs
Noteworthy advantages/advantages for members:
Humana’s Simplicity plan stands out for its distinct structure, as it does not involve a deductible. Instead, all medical services are assigned a predefined copay based on the type of incident, offering a plan that emphasizes predictability. This is referred to as the “no-surprises” plan.
Humana has a provider network that is significantly larger than Cigna (discussed earlier). In addition, their customer service department has received exceptional ratings from current enrollees. With 5 available plans, there is ample flexibility for most small employers to discover the suitable option.
Humana offers various plan options.
- Canopy: A high deductible option with manageable copays for basic services
- Simplicity: A budget-conscious option with no deductible; Enrollees have pre-set copay amounts for specific incidents
- Efficiency: A low-premium plan with more extensive coverage. Can be paired with a spending account to help pay for pre-deductible costs.
Regardless of the number of employees, Humana’s plans are accessible to businesses of any size.
Blue Cross Blue Shield: Big Resources to Offer Cost-Effective Plans
Prominent Advantages / Privileges for Members:
BCBS, an abbreviation for Blue Cross Blue Shield, is a prominent global health insurance organization. Comprising 36 distinct insurance companies, BCBS operates on a national scale and provides a diverse range of plan choices.
With its presence in all 50 states, BCBS demonstrates its size and financial stability. Additionally, their extensive network encompasses over 90% of the country’s doctors and hospitals.
The BCBS plan choices differ based on the state you are located in and the particular company you are affiliated with.
UnitedHealthcare: Massive Provider Network
Prominent advantages / Advantages for members:
Without a doubt, the largest provider network in the country.
Similar to BCBS, United Healthcare has a presence in all fifty states and has agreements with a significant number of doctors, hospitals, and specialists across the United States.
The plans offered to businesses with 2 to 50 employees may differ depending on the state.
Different options are available for UnitedHealthcare plans.
- Choice: Fixed-dollar copayments, multiple coinsurance options, and lower out-of-pocket costs when in-network.
- Choice Plus: Includes more coverage for out-of-network care.
- Options PPO: Employees can choose any provider they want without referrals. Members must obtain approvals for non-emergency services.
Options that are driven by consumer demand.
- United offers your employees access to both HSA-qualified plans and Health Reimbursement Accounts (HRAs)
MPB Health: The Best Health Plan for One-Person Businesses and Small Companies
Companies with a workforce of fewer than 10 individuals.
Outstanding advantages / privileges for members:
Although MPB SECURE is tailored for solo entrepreneurs, it can also effectively cater to small businesses.
MPB Health is not, in fact, an insurance company. Rather, it is a healthcare company that offers its members access to cost-sharing services for significant medical expenses.
Not only is MPB Secure tailored for one-person businesses, but it also offers a more cost-effective solution compared to traditional insurance. Additionally, MPB Secure is complemented by a qualified Minimum Essential Coverage (MEC) health insurance plan.
A business with a small group of generally healthy employees can benefit from this program. However, it’s important to note that as a health-sharing program, there may be waiting periods for pre-existing health conditions, unlike traditional health insurance.
Among the benefits reserved for members are unlimited access to telehealth services, Life Care provisions for conditions like depression, anxiety, and substance abuse, as well as a highly competitive Pharmacy Benefit Plan.
Self-Employed Health Insurance FAQ [Frequently Asked Questions]
How is health insurance handled when you are self-employed?
Business owners are exempt from offering health insurance unless their staff exceeds 50 individuals. Nevertheless, small companies can reap significant tax advantages from providing a group health plan. In the event of owning a business, you may acquire a group health plan as long as you employ at least one person besides yourself. Alternatively, if you operate as a sole proprietor, you can easily enroll in an individual health plan.
What is the cost of health insurance for a small business owner who is self-employed?
The price of health insurance for individuals who work for themselves or own small businesses is determined by various factors such as their location, the number of employees they have, the plan tier they select, and other considerations. Moreover, small business owners have the flexibility to decide the amount they wish to contribute towards their employees’ premiums as well as whether or not to provide coverage for their employees’ families.
Typically, it is feasible to obtain a group health insurance plan, costing around $300 per employee, and a group health share plan for roughly half that amount.
How does health insurance work for independent contractors?
A: Independent contractors have the option to enroll in individual or family health insurance plans just like any other person. There is no requirement to switch to group health insurance plans unless you start employing individuals.
What are the top health insurance choices for freelance employees working under a 1099 status?
1099 employees have access to various options for health coverage, such as marketplace health insurance, health sharing plans, DPC memberships, short-term insurance, and Medicaid (for eligible individuals).
What does the Self-Employed Health Insurance Deduction entail?
Many business owners or self-employed individuals can deduct their health insurance premiums up to 100%. However, due to a lack of understanding, they often fail to take advantage of this deduction.
If you meet certain criteria, you are eligible to claim the deduction for self-employed health insurance.
- You are a business owner, consultant, independent contractor, freelancer, or gig worker
- Your business has earned a net profit for the year
- You received wages from an S-corporation that you own more than 2% of
If you do not meet the requirements, you are not eligible to claim the self-employed health insurance deduction.
- You are otherwise eligible for coverage through another employer or a spouse
- Your business reported a net loss for the year or no earnings