If you run a small shop, you may want to help your crew with health costs. This guide walks through your options, the rules for each, and what coverage can cost.
This is general information, not tax or legal advice. Talk to a tax pro before you pick an option.
Do you have to offer health insurance?
As of October 4, 2026, under current law, most small businesses don't. The IRS rule is for employers that had at least 50 full-time workers last year, on average. That count includes full-time equivalents. Those employers may owe a payment if they don't offer coverage that meets the rules.
If you have fewer than 50, offering coverage is your choice. HealthCare.gov says there's no penalty if you don't.
Four ways to help your crew
Option 1: a small group plan
A small group plan is one health plan that you buy for your crew. You pick the plan or plans, and you choose how much of the premium you pay. You can buy one straight from an insurance company or through an agent. You can also use SHOP, the Small Business Health Options Program.
To use SHOP, you generally need 1 to 50 full-time equivalent workers. At least one must be someone other than an owner, a partner, or an owner's spouse or family member. You must offer coverage to all full-time workers, meaning those who work 30 or more hours a week. Part-time and seasonal workers are your choice.
In most states, at least 70% of the workers you offer it to must enroll or have other coverage. That rule doesn't apply from November 15 to December 15. You can start SHOP coverage any time of year. A waiting period for new hires can't be more than 90 days.
In Florida, the state's small group law covers employers based in Florida with 1 to 50 employees. See our small group health insurance page for more on group plans.
The Small Business Health Care Tax Credit
Some small employers can get a tax credit. It's worth up to 50% of what they pay toward premiums, or 35% for nonprofits. To qualify, you generally must:
- Have fewer than 25 full-time equivalent workers.
- Pay average wages under an IRS limit. For tax year 2025, it was less than $67,000 per full-time equivalent. The IRS's draft 2026 instructions list less than $69,000.
- Pay at least 50% of the cost of employee-only coverage for each worker.
- Offer a plan through SHOP.
The credit is for two tax years in a row. The smaller your crew and the lower your average pay, the bigger the credit. It's figured on IRS Form 8941.
One catch for Florida: in CMS plan data for 2026, we found no SHOP medical plans listed for Florida, only two children's dental plans. The credit generally requires a SHOP plan, so for 2026 most Florida employers may not be able to claim it. The IRS gives relief only to employers in a county with no SHOP plan that properly claimed the credit for 2025. Ask a tax pro if it applies to you.
Option 2: a CHOICE Arrangement (ICHRA)
As of October 4, 2026, CMS uses the name CHOICE Arrangement for what was called an ICHRA. Workers buy their own health insurance. Then you pay them back, tax-free, up to an amount you set. Any size employer can offer one. You need at least one worker who isn't an owner or an owner's spouse.
You can set different amounts for different classes of workers, like full-time, part-time, or seasonal. There's no federal minimum or maximum amount.
For an ICHRA, workers need individual health insurance that follows the ACA's rules, like a Marketplace plan or an ACA plan bought straight from an insurance company. Short-term plans and dental-only or vision-only plans don't count. CMS also says faith-based, indemnity, and supplemental plans don't count.
Option 3: a QSEHRA
A QSEHRA also pays workers back, tax-free, for coverage they buy. It's only for employers with fewer than 50 full-time workers that don't offer a group plan. It must have the same terms for all eligible workers. For 2026, the IRS limit is $6,450 for a worker alone and $13,100 for a worker with family.
See how the two HRAs compare in our guide to ICHRA vs QSEHRA.
Option 4: a raise or stipend
Some owners just add money to each paycheck. The IRS says a raise that isn't tied to buying health insurance isn't a health plan. It's extra pay, so it's generally taxed like wages, for you and your workers.
Don't pay a worker's own health insurance premiums outside a CHOICE Arrangement or QSEHRA. The IRS says that breaks ACA rules. It can lead to a tax of $100 a day for each worker.
What coverage can cost
KFF's 2025 Employer Health Benefits Survey found average yearly premiums of $9,325 for single coverage and $26,993 for family coverage. On average, workers paid 16% of the single premium and 26% of the family premium. The employer paid the rest.
KFF also found that 59% of firms with 10 to 199 workers offered health benefits. Starting in 2025, KFF no longer surveys firms with fewer than 10 workers. So these numbers may not match a very small crew.
Examples from trades crews
These are made-up examples to show how the rules work. They are not real clients. Your facts may lead to a different answer.
- A 4-person HVAC shop with all full-time techs wants one plan for everyone. A small group plan could work if enough of the crew enrolls or has other coverage.
- An electrical contractor with 12 full-time workers and 3 part-time apprentices picks a group plan. It must offer it to the 12 full-time workers. The apprentices are optional.
- A lawn care company with a year-round crew and summer help sets up a CHOICE Arrangement. Full-time workers get one amount, and seasonal workers get a different amount or none.
- A plumbing shop owner wants to keep it simple and adds a set amount to each paycheck. That raise is taxed like wages, and it can't be tied to buying insurance.
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