What Are Your Health Insurance Options With One Employee?

Key Takeaways

• The key question is whether your one employee is a true non-owner: SHOP and small-group plans generally require an eligible employee who is not the owner, partner, or their spouse.
• Small employers are generally not required under federal rules to offer health insurance; the shared-responsibility rules typically apply to employers with around 50+ full-time-equivalent workers, but state rules may differ.
• The Small Business Health Care Tax Credit may be available if you have fewer than 25 FTEs, pay at least 50% of employee-only premiums, and offer SHOP coverage to all full-time employees.
• Reimbursement options like QSEHRA or ICHRA let you fund your employee's individual plan instead of a group plan, but both carry compliance paperwork and specific federal requirements.
• A sole owner with no eligible non-owner employee typically shops the individual market, and Marketplace subsidies depend on household income, not on whether you own a business.
• Compare total cost (premiums, deductibles, out-of-pocket maximum), provider networks, and prescription coverage, and verify state SHOP participation rules and enrollment deadlines before committing.

So you run a small business, and it's just you and one employee. Congratulations! That's a real milestone. But now a big question pops up: what is the best health insurance for small business with one employee? Do you need to offer it? Can you even get a group plan? And what about your own coverage?

Here's the good news. You have more options than you might think. The tricky part is that the answer depends on one simple thing: is your "one employee" someone other than you? Or is the business just you?

In this guide, we'll walk through it in plain English. We'll cover small-group options, reimbursement arrangements, and individual plans for you and your family. By the end, you'll know what questions to ask and where to go next. Let's dive in!

First, What Does "One Employee" Really Mean?

This sounds like a small detail, but it changes everything. When people say "one employee," they usually mean one of two things:

• Owner-only business: You are the only person working. You might call yourself the employee, but you're really the owner.
• One non-owner employee: You own the business and you've hired one person who is not you, your business partner, or your spouse.

Why does this matter? Small-group coverage, including the federal SHOP Marketplace, generally requires at least one eligible employee who is not an owner, partner, or their spouse. According to Healthcare.gov, an owner-only business generally can't use SHOP to cover just the owner.

If you're a solo owner, don't worry. You still have solid paths to coverage. We'll get to those below.

Are You Required to Offer Health Insurance?

Short answer: usually not. Small employers are generally not required by federal rules to offer health coverage. The federal employer shared-responsibility rules typically apply to larger employers, often those with at least 50 full-time and full-time-equivalent employees.

That said, state rules can differ, and other obligations may apply. It's smart to check with your state's insurance department or an employment professional. Offering coverage is often a choice, not a mandate. But it can be a great way to attract and keep a good employee.

Can a Business With One Employee Get Group Health Insurance?

Yes, it's possible, if that one employee is not the owner or the owner's spouse. A business with one qualifying non-owner employee may be able to buy small-group coverage. That could be through SHOP where it's available, or directly from an insurer, depending on your state.

Here are a few things to know about SHOP:

• SHOP generally serves employers with 1 to 50 full-time-equivalent employees.
• Employers generally offer coverage to all full-time employees, usually those averaging at least 30 hours a week.
• SHOP enrollment is generally available year-round, though rules can vary by state.
• Some states use a minimum participation rule. The federal SHOP guide notes that many states use a 70% minimum, with an exception for applications during November 15 to December 15.

Because the rules vary by state, always verify the details for your location. And remember, group plan setup is a bit different from the individual and family coverage we focus on at Baker Health Solutions. If group coverage is your path, a licensed group broker or your state's resources can walk you through it.

Small Business Health Care Tax Credit: Could You Qualify?

A tax credit can take the sting out of employer premiums. But there are rules. According to HealthCare.gov and the IRS, the credit is generally tied to offering qualifying SHOP coverage. Core conditions generally include:

1. You have fewer than 25 full-time-equivalent employees.
2. Your average annual wages are below the applicable threshold for the tax year.
3. You pay at least 50% of your employees' employee-only premiums.
4. You offer SHOP coverage to all full-time employees.

The credit can be worth up to 50% of eligible premium contributions for taxable employers, and up to 35% for eligible tax-exempt employers. It's generally largest for employers with fewer than 10 employees and lower average wages. It's also generally available for no more than two consecutive tax years.

Wage thresholds change over time, so check the current numbers. Because tax rules depend on your situation, please talk with a qualified tax professional before counting on this credit.

What About Reimbursing Your Employee Instead?

Maybe a group plan feels like too much. Some small employers choose to reimburse an employee for the cost of their own individual plan. Two common tools are:

• QSEHRA (Qualified Small Employer Health Reimbursement Arrangement): This may let an eligible small employer reimburse employees tax-free for qualifying individual premiums and medical expenses, within annual limits.
• ICHRA (Individual Coverage HRA): Another employer-funded option, with different eligibility and coordination rules.

Both come with paperwork and compliance rules. Please verify current federal requirements before you set one up. A tax professional or benefits specialist can help you decide if one fits your business.

Quick Comparison: Your Main Options

What If It's Just You? Coverage for Owner-Only Businesses

If there's no eligible employee besides you, you'll generally look to the individual market. That includes ACA Marketplace plans and, in some cases, private plans outside the Marketplace. This is exactly where Baker Health Solutions can help.

Austin Baker is an independent agent who helps self-employed people and small business owners compare plans side by side. Whether you need coverage just for yourself or for your whole family, he explains premiums, deductibles, out-of-pocket maximums, doctors, and prescriptions in plain language.

Here's a helpful thing to know: Marketplace premium tax credits depend on your household income and other factors. They don't depend simply on whether you own a business. So if you've been told you won't qualify just because you're self-employed, it's worth a second look. If you're curious, our guide on small business owner health insurance options for 2026 goes deeper.

Marketplace Plans vs. Private Plans

Many owners ask us whether to choose a Marketplace plan or a private plan. Both can make sense depending on your situation. Marketplace plans are ACA-compliant and may come with subsidies if you qualify. Private plans can sometimes cost less, but they may involve health questions and benefit limits, so they aren't identical to Marketplace coverage.

Not sure which way to lean? Our article on Marketplace vs. private plans for sole proprietors breaks it down. You can also learn more about health insurance options on our main page.

Different Business Setups, Different Questions

How your business is set up can shape your next steps. If you're an LLC owner, take a look at how health insurance for LLC owners works. If you run an S corporation, this guide on S corporation owner health insurance may help. Solo founders might like finding coverage for a single member LLC.

Tax treatment of premiums depends on your individual circumstances. Please check with a qualified tax professional about any deductions.

How to Choose: A Simple Step-by-Step Approach

Feeling a bit overwhelmed? Totally normal. Here's an easy way to move forward:

1. Confirm who counts as your employee. Is it someone other than you, a partner, or a spouse?
2. Decide your goal. Do you want to offer coverage, reimburse costs, or just find coverage for yourself and your family?
3. Check your state. Plan availability, SHOP rules, and participation requirements vary.
4. Estimate your budget. Think about total employer cost, employee premiums, and deductibles.
5. Compare networks and drugs. Make sure your doctors and prescriptions are covered.
6. Talk to a licensed pro. A broker, your state insurance department, or a tax professional can confirm current rules.

What to Compare Before You Commit

Whichever route you choose, keep these points in mind:

• Total cost: Premiums plus deductibles and the out-of-pocket maximum. Our tips on picking a health insurance deductible can help.
• Provider network: Are your trusted doctors included?
• Prescription coverage: Check that your medications are on the plan's list.
• Administrative work: Group plans and HRAs add paperwork. Individual plans are simpler.
• Enrollment timing: Know your deadlines. See when open enrollment starts and what to do after open enrollment ends.

A Friendly Word About Your Family

Many small business owners we meet are covering more than themselves. Maybe there's a spouse, kids, or both. Employer coverage for one worker doesn't automatically solve family coverage, and family costs can add up fast.

That's where individual and family plans shine. You can compare options for your whole household, including dental and vision. If that sounds like you, you may like our guide to finding affordable family health insurance plans.

How Baker Health Solutions Can Help

At Baker Health Solutions, we focus on individuals and families under age 65, including self-employed people and small business owners. Austin is licensed in 28 states and offers no-pressure, plain-English guidance. He helps you understand your options and points you to the right next step, and he's there after enrollment too.

To be clear, Austin helps with individual and family coverage for business owners. He doesn't administer employee group plans, SHOP plans, or ICHRAs, and he doesn't offer Medicare services. Plans and rates vary, and approval or savings can't be guaranteed. But if you want clear answers, he's happy to help. Curious how it all works? Check out how it works, or learn more about Austin. You can also visit us on Google — Baker Health Solutions to see what clients say.

Ready to Take the Next Step?

Finding the right health insurance for a small business with one employee doesn't have to be stressful. Start by knowing whether your employee is a true non-owner. Then explore group coverage, reimbursement options, or individual plans that fit your life.

If you want help comparing plans for yourself and your family, get a free quote or contact Austin for a short, friendly conversation. You've built a business you're proud of. Let's make sure your health coverage fits it too.

FAQs

Q: Can a small business with only one employee get group health insurance?

A: Often yes, if that one employee is not the owner, a business partner, or their spouse. Options may include SHOP or direct small-group coverage, depending on your state and the insurers available. Rules and participation requirements vary, so it's worth verifying the details for your location.

Q: Can a sole proprietor buy health insurance through SHOP?

A: Generally, no. SHOP typically requires at least one eligible employee who is not the owner, partner, or their spouse. A sole proprietor with no other employees usually looks to individual-market coverage, like Marketplace or private plans.

Q: Does a business with one employee qualify for the Small Business Health Care Tax Credit?

A: It might. The credit is generally tied to offering qualifying SHOP coverage, with rules on wages, employer premium contributions, and company size. Because eligibility depends on your situation and the tax year, please check with a qualified tax professional.

Q: Is a small business required to provide health insurance to its only employee?

A: Generally not under federal rules. The federal employer shared-responsibility rules typically apply to larger employers. Your state may have its own rules, so it's smart to check with your state insurance department.

Q: Can a small business reimburse an employee for individual health insurance?

A: In many cases, yes. Arrangements like a QSEHRA or an ICHRA may let employers reimburse employees for individual premiums, within certain limits and rules. Verify current federal requirements and talk with a tax or benefits professional before setting one up.