If you run a business with a handful of employees, or a few dozen, offering health coverage is one of the most effective ways to attract and keep good people. It's also one of the most confusing decisions you'll make. There are three main paths: a traditional small group plan, a plan purchased through SHOP, or an ICHRA. Each works well for a different kind of business.
Option 1: A traditional small group plan
You choose one or more plans from a carrier, contribute toward premiums, and employees enroll in the plans you picked. This is the model most people picture when they think of "work insurance."
- Familiar and simple for employees. One plan menu and one ID card from the carrier.
- Carrier rules apply. Carriers typically set minimum employee participation and employer contribution requirements.
- Less cost predictability. Renewals can change year to year, and you bear that risk.
- Limited choice for employees. They're generally limited to the carrier and networks you selected.
Option 2: SHOP (Small Business Health Options Program)
SHOP is the Marketplace channel for small employer coverage, generally for businesses with 1 to 50 employees. The plans are small group plans, but SHOP has one feature regular group coverage doesn't: it's the only way to claim the Small Business Health Care Tax Credit.
- Potential tax credit for qualifying employers with fewer than 25 full-time-equivalent employees who pay at least half of employee-only premiums and meet average-wage limits.
- Otherwise similar to group coverage, including participation and contribution rules.
- Availability varies by area. Which carriers offer SHOP plans depends on your state and county. SHOP plans are typically purchased through a registered agent or directly from a participating insurer.
Option 3: ICHRA (Individual Coverage HRA)
With an ICHRA, you don't buy a group plan at all. You set a monthly allowance, and employees buy their own individual health insurance, then get reimbursed tax-free up to that amount. Our ICHRA vs. group cost comparison goes deeper on the math.
- Predictable budget. You decide the allowance, so your cost doesn't hinge on a carrier renewal.
- Employee choice. Each employee picks the plan, carrier, and network that fit them.
- No participation minimums and no minimum business size.
- Different allowances by employee class, such as full-time vs. part-time, within the rules.
- Trade-off: Employees shop individual-market plans, so they need guidance, and it interacts with Marketplace subsidies in ways employees should understand.
Want all three options priced for your team?
We'll compare a group plan, SHOP, and an ICHRA budget for your actual employee roster, and flag whether you may qualify for the tax credit. There's no cost to you.
Compare my optionsWhich one fits your business?
- Choose a traditional group plan if your team values one simple, familiar plan, you can meet participation requirements, and you're comfortable with renewal risk.
- Look at SHOP if you're a smaller employer with modest average wages who may qualify for the tax credit.
- Consider an ICHRA if you want a fixed budget, have employees in different situations or locations, or can't meet group participation minimums.
Your choice isn't permanent, either. Many businesses start with one approach and switch at renewal as the team grows or budgets change. For example, a business might move from a group plan to an ICHRA to gain cost control, or add a group plan once it's large enough to meet participation requirements comfortably. Just note that there are rules against offering the same class of employees both a group plan and an ICHRA.
There isn't one right answer. The best choice depends on your budget, your team, and how much you want to manage. Our small business benefits page also covers dental, vision, and other benefits you can pair with any of the three.
What to gather before you request quotes
Whichever direction you lean, having this information ready makes quotes faster and more accurate:
- A census of employees with dates of birth, ZIP codes, and whether each wants coverage for a spouse or dependents.
- Full-time and part-time counts, and your approximate number of full-time-equivalent employees.
- Your budget per employee, or the percentage of premiums you're willing to contribute.
- Average annual wages, if you want to check tax credit eligibility.
- Any current plan's renewal notice, if you already offer coverage.
- Which employees already have coverage elsewhere, such as through a spouse, since that can affect participation calculations.
With those details, it's usually possible to see within one conversation which of the three options fits your budget and team.
How Honorbrook helps
As an independent agency, we can quote group and SHOP plans across carriers and help you set up and explain an ICHRA to your team, so you're comparing real options, not sales pitches. Our help costs you nothing. For tax questions, we'll coordinate with your accountant.
Availability and rules vary by state
Health plans, premiums, enrollment rules and state programs differ by state and sometimes by county, and a given plan may not be available in every state. Honorbrook is licensed in the 11 states below; what we can offer you depends on what carriers sell where you live. Each state’s insurance regulator can verify an agent’s license and answer consumer questions.
- Virginia: Virginia Bureau of Insurance
- Maryland: Maryland Insurance Administration
- North Carolina: North Carolina Department of Insurance
- South Carolina: South Carolina Department of Insurance
- Georgia: Georgia Office of Insurance and Safety Fire Commissioner
- Alabama: Alabama Department of Insurance
- Louisiana: Louisiana Department of Insurance
- Texas: Texas Department of Insurance
- Michigan: Michigan Department of Insurance and Financial Services
- Indiana: Indiana Department of Insurance
- West Virginia: West Virginia Offices of the Insurance Commissioner