The short answer
Group health insurance is a single health plan bought by an employer that covers its eligible employees, and often their families. The employer chooses the plan, pays part of the premium and offers it to everyone who qualifies. Employees usually pay their share from their paycheck before tax.
Group health insurance is the way most working Americans get their health cover. Instead of each person buying a policy, an employer buys one plan (or a small menu of plans) and offers it to the people who work there. This guide explains how that works from the employer’s side.
How group cover differs from an individual plan
With an individual plan, one person or household chooses a policy, applies and pays the whole premium, perhaps with a tax credit from the Marketplace. With a group plan, the employer is the policyholder. It decides which plans to offer, who is eligible and how much of the cost it will pay.
Three things follow from that:
- The risk is pooled. The carrier prices the group as a whole, which is why a group plan can be offered to every eligible employee without health questions in the small group market.
- The employer pays a share. According to the KFF 2026 Employer Health Benefits Survey, workers paid on average 18% of the premium for single cover and 27% for family cover. The employer paid the rest.
- There are tax advantages. Employer contributions are generally a deductible business expense, and employees’ shares are usually taken from pay before income tax through a Section 125 plan. Your accountant can confirm how this applies to you.
What it costs, on average
KFF’s survey is the standard benchmark. For 2026 it reports:
| Per year | Single cover | Family cover |
|---|---|---|
| Average total premium | $9,804 | $28,303 |
| Average worker contribution | $1,672 | $7,471 |
These are national averages across firms with 10 or more workers. Your own premium depends on where your employees live, their ages, the plan you choose and, in the small group market, little else: healthcare.gov explains that small group premiums can vary only by age, location, tobacco use and plan category. We cannot quote for a particular business; a licensed broker can.
What a group plan must cover
Fully insured small group plans must cover the ten essential health benefits set by the Affordable Care Act, including hospital care, prescription drugs, maternity care, mental health and preventive services. Larger groups and self-funded plans follow somewhat different rules, but most cover the same ground. States can add their own required benefits for insured plans.
Who can be covered
The employer sets eligibility within the carrier’s rules and the law. Typical choices:
- Full-time employees, often defined as 30 or more hours a week.
- Dependents, meaning spouses and children up to age 26.
- A waiting period before new hires join, which federal law caps at 90 days.
Most carriers need at least one enrolled employee who is not an owner or an owner’s spouse, and many ask that a minimum share of eligible staff enroll. We cover that in minimum employees for group health insurance and group health insurance requirements.
The main types of group plan
Fully insured
The employer pays a fixed premium and the carrier pays the claims. This is how most small groups start, and it is what people usually mean by “group health insurance”.
Level-funded
A fixed monthly payment covers expected claims, administration and stop-loss insurance, with a possible refund if claims are low. KFF found 38% of covered workers at firms with 10 to 199 workers were in level-funded plans in 2026. See level-funded health plans.
Self-funded
The employer pays claims directly, capped by stop-loss insurance. Common at larger firms. See self-funded health insurance.
Reimbursement arrangements
An ICHRA or QSEHRA is not group insurance in the usual sense: the employer gives a tax-free allowance and employees buy their own individual plans. Some small employers use one instead of a group plan.
How an employer sets one up
- Decide the budget and contribution. Many small employers start by paying at least half of employee-only cover, which many carriers require.
- Gather a census. Ages, ZIP codes and cover tier for each eligible employee.
- Get quotes. From carriers directly, through the SHOP Marketplace, or through a broker who can compare several carriers.
- Choose and enroll. Employees enroll or sign a waiver, and the plan starts on the first of a month.
Very small employers should check the IRS small business health care tax credit, which can be worth up to 50% of premiums for two years for employers with fewer than 25 full-time equivalent employees who buy through SHOP and meet the wage test.
Do you need a broker?
You do not have to use one, but a licensed broker can save a lot of time: they know which carriers are competitive in your state, prepare the quotes, run enrollment and help through the year. For most small groups the broker is paid by the carrier. Our small group health insurance page explains the market a broker will work in.
This guide is general information for employers, not insurance, tax or legal advice. If you would like a licensed broker to look at your situation, the form below is the quickest way to get a name.