Small business health insurance in Arizona

Traditional group health insurance

Many small employers in Arizona choose to offer traditional group health insurance because it’s a familiar option. Group plans allow employers to split the plan’s premiums with their employees, making coverage more affordable for everyone. Employers can also extend the group health plan to staff’s spouses and qualified dependents, increasing satisfaction and morale.

Group health insurance typically comes in one of the following plan types:

• Preferred provider organization plans (PPOs): PPOs allow members access to an extensive provider network at discounted rates. Most PPOs cover out-of-network medical care at a higher cost.
• Health maintenance organization plans (HMOs): HMOs have smaller provider networks that contract with a health insurance carrier and agree to serve their members. HMOs tend to have lower premium amounts than other plans. But, members can’t visit a specialist without a referral.
• Exclusive provider organization plans (EPOs): EPOs use features of PPOs and HMOs. They require members to seek in-network care but allow visits to specialists without referrals.
• Point of service plans (POSs): Members of POS plans pay lower medical costs if they visit an in-network provider. However, like an HMO, they must get a referral from a primary care physician to visit a specialist.

Larger organizations often benefit more from group health insurance because they can receive coverage at a reduced rate and meet the minimum participation requirements. Most health insurers require that at least 70% of eligible employees enroll in the plan, which can be difficult for small employers with limited staff.

Group plans can also be expensive. According to KFF, the average annual premium in 2024 was $8,951 for self-only plans (or $746 per month) and $25,572 for family coverage (or $2,131 per month). On average, employers paid for 84% of self-only coverage premiums and 75% of family plan premiums.

To keep costs low, you can offer a high deductible health plan (HDHP). These plans have the lowest premium prices. But, they have more out-of-pocket costs for employees who seek medical care due to the higher deductible. This can place a greater financial burden on your staff.

Arizona small employers seeking group health insurance can shop for a plan on the federal Small Business Health Options Program (SHOP) Marketplace. Small group plans are only for businesses with fewer than 50 FTEs.

Do you have fewer than 25 FTEs and pay an average annual salary of $56,000 or less per employee? If so, you may qualify for the small business health care tax credit. You must offer SHOP coverage and pay at least 50% of your employees’ premiums to qualify. Use the Marketplace’s Small Business Tax Credit Calculator to determine your eligibility for the federal tax credit.

According to HealthCare.gov's rate review site, the following health insurance companies offer small group plans in Arizona in 2025³.

Integrated HRAs

If you want to buy a group health plan, you can supplement it with an integrated HRA. Also known as a group coverage HRA (GCHRA), this health benefit is for Arizona employers of any size that offer group health insurance. Only employees enrolled in your group plan can participate in the benefit.

With this type of HRA, you give your employees a monthly allowance that they can use for qualified out-of-pocket healthcare costs. Once they show proof of an eligible expense, you reimburse them tax-free up to their allowance amount. However, premiums aren’t eligible for reimbursement.

Eligible expenses include costs the group plan doesn’t cover or fully cover, like:

• Deductibles: This is the amount employees must pay out-of-pocket before their insurance company begins to cover the costs of their medical care.
• Coinsurance: This is the percentage of costs employees must pay for a covered service after they meet their annual deductible.
• Copays: This is a fixed dollar amount employees must pay for covered medical services and items after they receive care.

A major plus of a GCHRA is that it can meet any organization’s needs and budget.

Here’s how you can customize a GCHRA:

• A GCHRA can work with any group plan. But they’re especially beneficial if you combine them with an HDHP. The HDHP helps you save money on health insurance premiums, while the GCHRA helps employees afford the plan’s higher deductibles.
• Unlike other HRAs, the GCHRA has no minimum or maximum contribution limits. You can set the allowance that works best for your company.
• You can vary allowances and eligibility by seven employee classes.

Stand-alone HRAs

Group health plans come with high premium rates for small employers. When you compare individual and group plan coverage options in certain Arizona counties, individual health insurance policies are more affordable.

Below are the monthly premiums for a 50-year-old with a silver plan in several Arizona counties in 2024:

All table data from Ideon’s 2025 premium comparison map⁴.

Luckily, there’s a way to take advantage of the cheaper individual coverage rates as an employer. You can offer a stand-alone HRA to enable your employees to purchase these plans.

Unlike integrated HRAs, stand-alone HRAs don’t work with group health insurance. Instead, stand-alone HRAs allow Arizona employers to reimburse employees tax-free for qualifying out-of-pocket medical expenses and individual health plan premiums.

Like GCHRAs, stand-alone HRAs let you set a monthly allowance and reimburse your staff for eligible medical expenses. However, you don’t need to buy group coverage. Instead, employees choose their preferred individual health plan, and you reimburse them for their premiums and other healthcare costs.

There are two types of stand-alone HRAs:

1. The individual coverage HRA (ICHRA): The ICHRA is for organizations of all sizes. Like the GCHRA, there is no minimum or maximum contribution limit. You can vary allowances and eligibility using employee classes. Employees must have a qualifying form of individual health insurance to participate in the benefit.
   1. Instead of choosing a group health plan, ALEs can design an ICHRA to satisfy the employer mandate.
2. The qualified small employer HRA (QSEHRA): The QSEHRA is for small employers with fewer than 50 FTEs. It has no minimum contribution limits, but the IRS sets annual maximum limits. Employees must have a health plan with MEC to participate in the benefit.

Stand-alone HRAs are a great option for employers seeking an alternative to traditional health plans. With a QSEHRA or ICHRA, you can save money on coverage while giving your employees more flexibility and choice over their healthcare.

Association health plans

Small businesses and self-employed individuals with fewer than 50 employees can also offer an association health plan (AHP). AHPs allow several businesses to join forces—typically within the same industry, profession, or region—to buy health insurance as a larger group. This collective buying power can lead to lower premiums.

While AHPs work similarly to traditional health insurance, they don’t have to meet all ACA regulations, meaning they don’t work for ALEs. Additionally, coverage options under AHPs can limited, which may not fully meet your employees' healthcare needs.

If you’re looking for a more flexible coverage option, an HRA could be a better fit.