Putting out fires, herding cats, call it what you want; there’s always something that needs attention when you run a small business. The frustrating reality is there’s never enough time or money to do everything you want—or need—to do, even when you want to do it. Particularly when it comes to offering health coverage to your employees. 

It’s even more difficult when you only have a handful of people on your payroll; not only from a cost standpoint, but with such a small team they become like family and you want to take care of them. Even so, you resign yourself to thinking it’s too expensive and hope for the best.

But is it? 

The Hidden Costs of Not Offering Healthcare

Most small business owners know the pain of employee churn. A well-structured search, which has the best likelihood of success (but not guaranteed), can be time-consuming and expensive while “going with your gut” can be even more costly when it goes wrong. Depending on the employee type, turnover can cost between 30% and 150% of that position’s salary. 

Additionally, untreated health conditions and illness can cost you lost productivity. Absenteeism costs U.S. employers almost $3,000 per employee, per year. It’s not only the financial cost, but you are the one likely picking up the rope when one of your employees is out sick. 

The Financial Argument for Providing Health Insurance Coverage

Providing some form of health coverage for your employees can significantly reduce turnover. Three-fourths of small businesses surveyed report that it helped retain employees and a similar number claim it improves morale. In addition, 60% said it reduces absenteeism. 

Another reason to offer a healthcare plan is the reduction in taxes. Your contribution to an employee’s premium is tax-exempt. These contributions are also deductible when you’re filing your taxes. The net result is that you and your team pay less in taxes. 

Affordable Options for Small Businesses

Great, you may say, but what’s out there for a small business and what’s the best option? Below are some options to consider. Your circumstances may vary, so be sure to consult insurance and accounting professionals.

SHOP Marketplace Plans (Small Business Health Options Program)

The SHOP Marketplace was created specifically for small employers with 1–50 full-time equivalent employees. It’s a straightforward way to offer group coverage without getting buried in complexity. You can also explore the official CMS SHOP Program Overview for eligibility details and tax credit information.

The official marketplace for Colorado is “Connect for Health Colorado”, which you can find at their website: https://connectforhealthco.com/get-started/options-for-small-business-owners/.

Why it works:

• You choose the plan(s) and how much you want to contribute
• Employees pick the option that fits them best
• If you have fewer than 25 employees, you may qualify for a Small Business Health Care Tax Credit
• Predictable monthly costs

Traditional Small-Group Health Insurance (Private Carriers)

This is the classic employer-sponsored model, purchased directly from insurers like UnitedHealthcare, Anthem, Aetna, Kaiser, etc.

A good example is UnitedHealthcare’s small business plans, which cover companies with 2–50 employees.

Why it works:

• Broadest selection of plan types (HMO, PPO, EPO, POS)
• Access to large provider networks
• Customizable coverage levels

Level-Funded Plans (The Hybrid Option)

Level-funded plans blend the predictability of traditional insurance with the potential savings of self-funding.

For a small-business-friendly overview of level-funded and alternative plans, you can link to this guide: HSA for America – Small Business Healthcare Plans

Why small businesses like them:

• Often cheaper than traditional plans
• More transparency into how healthcare dollars are spent
• Good fit for younger or generally healthy teams

Health Reimbursement Arrangements (HRAs)

HRAs let you reimburse employees for health insurance they purchase on their own — tax-free. The best authoritative explanation is here: HealthCare.gov – Learn About HRAs. This covers both QSEHRA (for businesses under 50 employees) and ICHRA (for any size).

Why HRAs are appealing:

• You control the budget
• Minimal administrative burden
• Employees get freedom to choose their own plan
• Tax advantages for both employer and employee

Investing In Your People

Offering health coverage doesn’t have to be overwhelming or out of reach. There are many different options for even the smallest teams which can contribute to the overall health and stability of your business. It’s a signal that you care about your employees, and the expense can be mitigated through reduced turnover and tax deductions. When you take care of your employees, they take care of your business and that’s a return that no spreadsheet can capture.