Health Insurance Options for Small Business Owners

Having No Insurance, Should Never Be an Option

Medical Insurance Claims Form

The majority of small businesses in the United States do not have health insurance coverage for either their owners, or employees. The reason for the lack of coverage among small businesses is the high cost of insurance policies. Because small businesses do not purchase policies in volume, they lack the buying power of major corporations and are charged higher premiums for the same (or inferior) coverage.

Health insurance is a good idea even for healthy individuals, but for those with medical conditions it is critical to have at least major medical insurance coverage. In most cases, having some insurance is better than having none at all.

Group Purchasing Arrangements (GPAs)

GPAs help lower insurance premiums for small businesses by bringing multiple small groups together in order to achieve the buying power of a large group. The states that have mandated GPAs are:

  • Arkansas
  • Kansas
  • Montana
  • New York
  • New Mexico
  • Ohio
  • Texas
  • Wisconsin

If your state does not have a GPA, look for associations of employers or individuals, and other small business owners who have established GPAs.

High Risk Medical Pools

Thirty-eight states have state-run, or state-sponsored insurance programs called "High Risk Medical Pools" or "Major Medical Risk Insurance Pools." For people who cannot get insurance through other avenues (usually due to a preexisting medical condition), state high risk medical pools usually guarantee coverage - for a price.

States that do not have medical pools are:

  • Arizona
  • District of Columbia
  • Georgia
  • Massachusetts
  • Michigan
  • Nevada
  • New Jersey
  • New York
  • Pennsylvania
  • Rhode Island
  • Vermont, and
  • Virginia

To find out about health insurance options in your state, contact the state's insurance commission or your health and human services department.


Reinsurance programs vary by state. Some states offer subsidies for health insurance to small business owners and the low-income population, others offer purchasing pools. Some reinsurance programs shift the cost of care for some enrollees to a third party that may include the state, a reinsurance pool, or reinsurance carrier.

If your state has a reinsurance program it is worth looking into. While options vary, all reinsurance programs are designed to help reduce the costs of insurance premiums.

States that have reinsurance programs are:

  • Arizona
  • Connecticut
  • Idaho
  • Massachusetts
  • New Hampshire
  • New Mexico, and
  • New York

Although health insurance premiums are hard for most small business owners to afford, having coverage is worth it. If you have even one serious medical situation, a single day of hospital care could easily cost more than an entire year's worth of premiums.

Additional Health Insurance and Employee Benefits Resources

Here are some additional resources to help you find the right insurance plan and benefits to offer your employees, or the right insurance if you are not able to obtain reasonable insurance through your employer or you own small business:

What's the Difference Between Short-term Disability and Temporary Disability?

  Learn about the differences, pros and cons between short term disability and temporary disability insurance coverage.

Group Dental Benefits - How to Choose and Use Them for Maximum Health:  Learn how to choose the best dental benefits and how to get the maximum benefit from this group wellness option.

Learn the basic building blocks of a competitive benefits package:  Use these guidelines for developing a competitive employee benefits package that will appeal to more workers to improve recruitment and retention.

Recruitment Gets a Boost with Wellness Benefits for Employees:  Understanding the link between corporate wellness programs and recruitment efforts can provide a better recruitment ROI for any business seeking to attract the best talent.

Grab This Helpful List of Employee Benefit and Payroll Admin Resources:  Get this must-have list of free and low-cost Employee Benefits and Payroll Tax resources for savvy Benefits Administrators.

Everything You Need to Know About FMLA, but Were Afraid to Ask:  Get all your most important questions answered about the Family Medical Leave Act FMLA, and learn how to take advantage of this employee benefit.

Should you Choose Your Employee Benefits Through Work?  Is buying health insurance through your employer a good idea, or are there negatives to this? Read the pros and cons of employer-sponsored benefits.

Amazing New List of Low Cost Employee Corporate Wellness Program Ideas:  Discover amazing low cost ways to create a corporate wellness program for a healthier, more productive workplace and a better employee benefits package.