Average cost of small business health insurance

What employer health insurance costs in 2025

According to the KFF 2025 Employer Health Benefits Survey (the most recent available), the average annual premium for employer-sponsored coverage reached $9,325 for single coverage and $26,993 for family coverage. Family premiums rose about 6% year over year.

• Single coverage: $9,325 per year on average
• Family coverage: $26,993 per year on average
• Workers contributed an average of $1,440 toward single coverage and $6,850 toward family coverage
• On average, workers pay 16% of the single premium and 26% of the family premium

What small businesses specifically pay

Small firms (10–199 workers) pay roughly the same as large firms for single coverage and a bit less for family coverage — but their employees shoulder a much larger share of the cost.

Per KFF 2025, small-firm workers contribute 36% of the family premium on average (about $8,889), versus 23% (about $6,227) at large firms. The offer gap is just as stark: 59% of small firms offer health benefits, against 97% of large firms.

• Small-firm single premium: $9,211 / year
• Small-firm family premium: $26,054 / year
• Small-firm worker family contribution: 36% (~$8,889) vs 23% at large firms
• Small firms offering coverage: 59% vs 97% of large firms

Average employee health insurance cost per month

Most budgets are built monthly, so here are the same KFF 2025 figures divided by twelve. The average total premium works out to about $777 a month for single coverage and about $2,249 a month for family coverage. Workers contributed roughly $120 a month toward single coverage and $571 a month toward family coverage, which leaves the employer's share at about $657 a month per employee for single coverage and about $1,679 a month for family coverage. At small firms specifically, the total premium averaged about $768 a month for single and $2,171 a month for family coverage, with the employee carrying a larger slice of the family number than at large firms.

Those are national averages of what employers actually paid, not quotes. Your monthly number moves with the age mix of your team, the rating area for each employee's address, the metal tier of the plan, and how many dependents enroll — all of which are laid out further down. What the monthly framing makes obvious is the comparison: an ICHRA allowance is also a per-employee monthly figure, so you can set it directly against the employer-share column above and see, before signing anything, whether a fixed allowance would cost more or less than the group premium share you are carrying today.

The deductible is part of the cost

Premium is what the employer sees; the deductible is what the employee feels. In 2025 the average general annual deductible for single coverage was $1,886, and 34% of covered workers were in a plan with a deductible of $2,000 or more (KFF 2025). When a small firm holds its premium down by moving to a higher-deductible group plan, the cost has not gone away — it has moved onto the employee's side of the ledger.

Why small-business premiums keep climbing

Small employers have the least negotiating power, face annual renewal increases, and often must meet participation minimums to keep a group plan. The result is a cost that rises every year and is hard to predict.

The predictable alternative: ICHRA

With a group plan, the insurer sets your cost and raises it at renewal. With an ICHRA, you set a fixed monthly allowance and reimburse employees tax-free for individual coverage — so your benefits budget is a number you choose, not one handed to you. For small businesses squeezed by rising premiums, that predictability is the real saving. Use our ICHRA calculator to model a budget.

What an ICHRA costs to run

An ICHRA has two cost lines: the allowance you choose, and administration. Most ICHRA administrators charge in the range of $14 to $85 per employee per month, sometimes with a one-time setup fee — see our ICHRA administration cost guide for what sits at each end of that range. There is no participation minimum and no renewal, so the administrative line is the only one that is not entirely yours to set.

Plan for the timing as well as the total: with most administrators you fund premiums before each coverage month, with a deposit due before open enrollment. We offer financing for upfront ICHRA funding if that gap is the sticking point.

How many small employers are already doing this

Funding individual coverage is a measurable trend, not a theory. KFF found that in 2025, 4% of firms offering health benefits and 9% of firms not offering benefits gave funds to one or more employees to buy non-group coverage. The HRA Council's Growth Trends for ICHRA & QSEHRA, Vol. 5 (August 2026) counts more than 20,000 U.S. businesses offering an ICHRA or QSEHRA to at least 500,000 employees. More than two-thirds of small businesses offering an ICHRA had previously offered no coverage, and nearly a third of small adopters moved out of the small-group market — the same market whose premiums are described above.

Sources & methodology

Premium, contribution, deductible and offer-rate figures are from the KFF 2025 Employer Health Benefits Survey, the most widely cited annual source for U.S. employer coverage costs. Adoption figures are from the HRA Council's Growth Trends for ICHRA & QSEHRA, Vol. 5 (August 2026). ICHRA administration pricing is a market range attributed in our administration cost guide. Figures reflect the 2025 survey year and are updated annually; treat them as current-year benchmarks, not quotes. Individual results vary by location, plan, and workforce.

What drives your specific number

No two employers pay the same. Your actual cost depends on a handful of factors insurers price in — which is exactly why a flat quote is rarely accurate.

• Employee ages — premiums rise on a federal age curve, so an older workforce costs more (New York and Vermont are the exceptions: community-rated, no age factor).
• Location — premiums vary widely by state and rating area (your county and ZIP).
• Plan tier — Bronze, Silver, Gold, and Platinum trade premium for out-of-pocket cost.
• Single vs. family enrollment — dependents multiply premium.
• Participation — group plans often require a minimum share of employees to enroll.

Group vs. ICHRA: two different cost models

With a group plan, the insurer sets the premium and typically raises it every renewal, so you absorb whatever increase they hand you. With an ICHRA, you set a fixed monthly allowance per employee, so your benefits line item is a number you choose and control.

That difference is the whole point for cost-conscious employers: you trade an unpredictable annual premium for a budget you set in advance.

A realistic budgeting example

Illustrative only. Suppose you have 10 employees and set a 500-dollar monthly ICHRA allowance. Your maximum benefits spend is 10 x 500 x 12 = 60,000 dollars a year — fixed, regardless of how the individual market moves. If an employee's plan costs less than their allowance, you reimburse only the lower amount, so real spend is often below the ceiling. Add administration at, say, 30 dollars per employee per month and the all-in ceiling is 63,600 dollars.

Compare that with a group plan, where a double-digit renewal can add thousands you did not budget for.

Costs people forget to count

The sticker premium is not the whole story. When you compare options, factor in the extras that quietly add up.

• Administration and compliance work, or fees to outsource it.
• Broker and HR time spent managing renewals.
• Renewal shock — mid-year budget hits from group increases.
• The payroll tax you would owe if you paid the same money as a taxable bonus instead of a tax-free reimbursement.

How to lower your cost without cutting benefits

You have more levers than a group plan gives you.

• Set the allowance by employee class (for example full-time vs. part-time) so you fund where it matters.
• Use the Federal Poverty Line affordability safe harbor to meet compliance without over-funding.
• Review the allowance annually instead of accepting an automatic renewal increase.
• Let employees choose their own plan tier so they can buy down premium if they prefer.

Small business health insurance costs by state

Premiums are a local number. The same plan design costs meaningfully different amounts depending on the rating area, and the individual market an ICHRA allowance buys into varies state by state — which is why a national average is a starting point, not an answer.

State-level breakdowns: small business health insurance in Texas, small business health insurance in California, small business health insurance in New York, small business health insurance in Ohio, small business health insurance in Pennsylvania, small business health insurance in Michigan, small business health insurance in Georgia, small business health insurance in Arizona, small business health insurance in Colorado, and small business health insurance in Indiana.