For small employers
A business owner with 10 employees was told his broker's plan was the one the federal government required him to offer. It was not. Under 50 employees, the government does not require you to offer health insurance at all. Here is what you can actually do.
The Affordable Care Act's employer mandate applies to Applicable Large Employers. That means 50 or more full-time equivalent employees. If you have fewer than 50, the mandate does not apply to you. There is no requirement to offer coverage and no penalty for not offering it.
What is true is narrower. If you choose to offer a group health plan, that plan has to follow ACA market rules. In the small group market it has to cover the ten essential health benefit categories. It cannot exclude pre-existing conditions. It has to cover dependents to age 26 and preventive care with no cost sharing.
That is a rule about what a group health plan must contain. It is not a rule that you must buy one.
There is usually a second thing hiding behind "the government requires it." Carriers set participation requirements. A fully insured small group plan commonly requires a percentage of eligible employees to enroll before the case will issue. Miss it and the carrier declines the group. That is a carrier underwriting rule, not federal law, and it is the constraint that most often narrows what a small employer gets shown.
When someone tells you your options are fixed, ask which rule they mean. Usually it is the carrier's.
Four structures are available to a company your size. A broker who only sells one of them will describe the other three as unavailable. None of these is automatically the right answer. Which one fits depends on your people, and that comparison is the whole point.
An ICHRA lets you give employees a defined amount of tax-free money to buy their own individual health insurance. You set the amount. There is no federal cap on what you can contribute. Employees who take it must be enrolled in individual coverage, and you can vary the allowance across defined classes of employees, such as full-time versus part-time or by location.
The advantage is budget control. You decide the number and it does not move at renewal because your claims went badly. The tradeoff is that employees shop the individual market, which means their network and their doctor depend on what is sold in your county, not on what you negotiated.
One thing to size carefully. If your allowance is considered affordable for an employee, that employee cannot also claim a premium tax credit on the marketplace. For a lower-wage workforce, an allowance set at the wrong level can leave people worse off than doing nothing. This is a design question with a real answer, and it should be modeled against your actual census before you commit.
A QSEHRA is the version built specifically for employers under 50 who do not offer a group health plan. Same idea as an ICHRA: tax-free money toward the employee's own coverage and medical expenses.
The differences are the guardrails. The IRS caps it. For 2026 the maximum is $6,450 per year for an employee with self-only coverage and $13,100 for an employee with family coverage. You cannot offer a QSEHRA alongside a group health plan to anyone. Terms have to be uniform across eligible employees, with limited exceptions. And you have to give written notice to each eligible employee at least 90 days before the plan year starts.
QSEHRA also interacts with premium tax credits, and the interaction is different from ICHRA. An employee's credit is reduced by the QSEHRA allowance rather than eliminated outright. For a workforce that qualifies for substantial subsidies, that difference matters, and it can favor QSEHRA over ICHRA.
Either way the arithmetic decides, not the brochure.
Sometimes the answer is a plan you actually sponsor. It just is not a full major medical plan. Two structures do this, and they fit different workforces.
A minimum essential coverage plan (MEC) covers the floor. ACA preventive services at 100 percent in network, unlimited telemedicine, and free preventive drugs, run through digital enrollment and in-house administration. It is inexpensive per employee because it is not trying to be major medical. Step it up to a MEC-plus-fixed-indemnity design and it also pays set dollar amounts toward physician visits, labs, imaging, emergency room, and surgery. Some of these plans add a direct primary care option: unlimited in-office primary care, urgent care, and telemedicine for a visit fee of $0 to $25, which on a lower-wage crew is often the benefit people actually use.
Be straight about what MEC is. It covers preventive care and routine access well. It is not going to carry someone through a serious claim. Anyone who sells it to you as equivalent to a group health plan is doing the same thing your last broker did.
A minimum value plan (MVP) is the step up, and for most companies under 50 it is the more interesting one. Tiered designs with deductible options around $1,000, $2,500, and $5,000, on a national network. Coverage includes emergency room, in-patient and out-patient hospitalization, urgent care, surgery, diagnostic testing, advanced imaging, physician visits, chiropractic, physical therapy, home healthcare, and tiered prescription drugs, with the higher tiers adding sleep studies and cardiac rehabilitation. Claims run through an in-house administrator with fast underwriting turnaround. This is real coverage, priced below a metallic ACA plan, in a structure that does not collapse if only part of your crew enrolls.
The reason these work at your size is the enrollment floor. A fully insured small group plan usually has to clear a participation percentage before a carrier will write it, and on a small or hourly workforce that threshold is exactly what kills the case. The sponsored plans we use issue on a flat minimum instead: as few as five enrolled employees for one, ten for another. A fixed floor takes the participation failure off the table for a company your size.
One caution that applies to any MEC plan. Enrolling an employee in MEC can make that employee ineligible for a marketplace premium tax credit. For a low-wage worker who would qualify for a large subsidy, that can be worth more than the MEC plan itself. It is the same tax-credit math that governs the HRA decision, and it is the reason the census comes before the product.
Both structures can sit alongside a traditional plan rather than replacing it, and employer contribution is flexible. You can put in a lot, a little, or nothing.
The fourth option is the one your broker probably led with: a fully insured small group plan from a major carrier. It can be the right answer, particularly on a higher-wage workforce where employees would not qualify for meaningful marketplace subsidies and value a broad network. The thing to know is that it is a choice among four, not the only lawful path, and it is the one most exposed to the participation gate described above.
You do not start with a product. You start with the census.
Wages, ages, family status, and how many people would qualify for a marketplace subsidy determine which structure leaves employees better off. On a low-wage workforce, an HRA sized wrong can cost people money. On a higher-wage workforce, an HRA can outperform a group plan the company cannot afford to renew. The same census that makes one option obviously right makes another obviously wrong, which is why a broker who sells only one product cannot answer the question honestly.
That is the work: run the numbers, see what each option does for the company and for each person on the payroll, then choose.
This page is here to inform, not to pitch. When you want the comparison run against your own roster, that is what we do. We design the program, run the enrollment one on one with every employee, and handle the payroll feed, the notices, and the administration. You approve the deductions.
Send a census and we will show you the four options side by side and what each one costs. Call 918.417.2070 or write [email protected].
Send a census. We will show you the options and what each one costs.