Small business health insurance in Colorado
Small business owners in Colorado know that offering health insurance to their staff is a vital employee benefit. It helps you attract and retain top talent and shows you care about the health and well-being of your team and their families. But navigating the health insurance landscape in The Centennial State can be tricky.
If traditional options seem too expensive or limiting, we’ve got you covered. Learn how PeopleKeep can help you offer a flexible and affordable health benefit with a health reimbursement arrangement (HRA).
Colorado small business health insurance information
There are almost 137,000 small businesses with fewer than 50 employees in Colorado. Yet, only about 23% offer their employees health coverage. By providing a health benefit, you’ll better stand out among your competitors in a tough job market.
Many small business owners find offering health benefits that fit their team's needs and budgets challenging. If you feel that providing health insurance isn't possible, don’t worry. There are several benefits you can still consider.
This guide explains why offering health benefits is essential for your Colorado-based business. It will also outline your coverage options, including alternatives to traditional group plans.
Topics covered in this guide include:
Overview of small business health insurance in Colorado
Offering health benefits to your employees is essential to building a positive workplace. Luckily, small employers in Colorado have a wide range of options—each with its benefits and drawbacks.
Many businesses opt for group health insurance. A traditional group plan offers employees basic coverage at a reduced cost. This option may be familiar to your staff. But, they can be expensive for small employers. Many small employers also have trouble meeting the minimum participation requirements.
One popular alternative is a defined contribution health plan, such as an HRA. Employers can use an HRA to reimburse employees for qualified expenses and individual health plan premiums tax-free.
By understanding your available options, you can make more informed decisions about health benefits and keep your budget in check.
Importance of small business health insurance
Small businesses are a critical component of Colorado’s economy. Adding health insurance to your benefits package can set you apart from competitors and create a healthier, more satisfied workforce. Below, we’ll go over why offering your employees health benefits is a smart choice for your business.
The employer mandate
The federal government doesn’t require some small businesses in Colorado to offer health insurance to their employees. But, the Affordable Care Act requires applicable large employers (ALEs) to follow the employer mandate.
Here’s a brief overview of what the employer mandate requires:
- Organizations with 50 or more full-time equivalent employees (FTEs) must offer affordable health insurance that provides minimum essential coverage (MEC) to at least 95% of their full-time workers and their dependents.
- If an ALE doesn’t offer an affordable plan to at least 95% of their full-time employees and at least one of those workers purchases a health plan with a subsidy on the individual market, they could be subject to tax penalties.
- ALEs could also face a fine if their health benefit doesn’t pay for at least 60% of covered medical expenses for the standard population. This rule ensures your coverage provides minimum value to your workers.
The ACA doesn’t require small businesses and nonprofits in Colorado with fewer than 50 FTEs to offer health insurance. But if you do, you can better attract and retain your workforce.
Benefits of providing health insurance to employees
Offering health coverage has many benefits beyond complying with the employer mandate.
Providing a robust health benefit has several advantages, including:
- Boosting employee satisfaction and retention. Employees who feel valued and supported are more likely to stay with your company. This reduces turnover and the costs of hiring new workers.
- Enticing talented workers. A competitive benefits package is a significant factor for job seekers. Our 2024 Employee Benefits Survey found that 81% of employees consider benefits important when deciding to accept a job. Furthermore, 92% rated health benefits as a top priority.
- Enhancing productivity and health. Providing health coverage helps employees access medical care when needed, allowing them to focus better when at work. Healthier employees also miss fewer days due to illness and stress, improving job performance.
Small business health insurance options in Colorado
Many health insurance options are available in Colorado, and they all provide different benefits. So, small employers must research each option before choosing one.
Each choice has various features, coverage options, and costs to consider. This helps small employers customize their health benefits based on their budget and staff.
Group health insurance in Colorado
Small businesses in Colorado often choose to offer traditional group health insurance to their employees. These policies allow employers to share the cost of premiums with their workforce, making coverage more affordable. Additionally, employers can extend the group plan to employees’ spouses and dependents for added value.
Group plans typically come in one of the following models:
- Preferred provider organization plans (PPOs): PPOs are the most widely preferred type of plan. They allow access to a provider network offering services at discounted rates. Most PPOs cover out-of-network care at a higher cost.
- Health maintenance organization plans (HMOs): HMOs use a defined network of providers who either exclusively work with the HMO or have agreements to serve its members.
- Exclusive provider organization plans (EPOs): EPOs combine features of PPOs and HMOs. For example, they require members to use in-network providers but allow visits to specialists without referrals.
- Point of service plans (POSs): With POS plans, employees pay lower costs when using in-network providers. But, they must get a referral from a primary care physician to see specialists.
Larger organizations often benefit more from group health insurance because they can distribute risk across a larger employee pool, which can lower premiums. But, most health insurance companies require that at least 70% of eligible employees enroll in the plan to offer coverage. This can be a hurdle for smaller companies with fewer staff members.
Group plans can be expensive for small businesses. According to KFF, employers, on average, paid for 84% of self-only coverage premiums and 75% of family plan premiums. These costs can add up quickly, depending on how many employees participate in your group policy.
To keep costs low, you can consider a high deductible health plan (HDHP). These plans have the lowest premiums. But, they come with higher out-of-pocket costs for employees. This is because employees must meet a higher deductible before insurers start sharing the cost of their medical expenses. These higher costs may place a greater financial burden on employees, lowering morale.
If you are considering buying group coverage, you must know where to go. Small group plans are available for organizations with fewer than 50 FTEs. Colorado doesn’t use the federal Small Business Health Options Program (SHOP) Marketplace. But, employers can get a small group health plan through the state exchange, Connect for Health Colorado.
Those with fewer than 25 FTEs who pay an average annual salary of $53,000 or less per employee may also qualify for the small business health care tax credit. To qualify, employers must offer coverage from the Connect for Health Colorado small business Marketplace. They must also pay at least 50% of their employees’ premiums.
To determine your eligibility for the tax credit, use the Marketplace’s Small Business Tax Credit Calculator.
According to HealthCare.gov's rate review site, the following health insurance companies offer small group plans in Colorado in 2025.
|
Insurance company |
Network type |
SHOP status |
|
HMO Colorado, Inc. |
HMO |
Off-exchange plans |
|
Kaiser Foundation Health Plan of Colorado |
HMO, POS |
On- and off-exchange plans |
|
Kaiser Permanente Insurance Company |
PPO |
Off-exchange plans |
|
Rocky Mountain Hospital and Medical Service, Inc. |
PPO, EPO |
Off-exchange plans |
|
United Healthcare Insurance Company |
Off-exchange plans |
|
|
United Healthcare of Colorado, Inc. |
Off-exchange plans |
According to KFF, the average annual premium in 2024 was $8,951 for self-only coverage (or $746 per month) and $25,572 for family coverage (or $2,131 per month). These high prices can make securing a group plan too much financial hardship for small employers.
Integrated HRAs
If you want to buy a group health plan, you can supplement it with an integrated HRA. Also called a group coverage HRA (GCHRA), this health benefit is for Colorado employers of any size that offer a group health plan. Only employees enrolled in your group policy can participate.
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 you must pay out-of-pocket before your insurer begins to cover the costs of medical care.
- Coinsurance: This is the percentage of costs you must pay for a covered service after meeting your deductible.
- Copays: This is a fixed amount you must pay for covered services and items after receiving care.
A major perk of GCHRAs is that they’re customizable to meet any employer's specific needs.
Here’s how you can personalize 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 premiums, while the GCHRA helps employees with their higher deductibles.
- With a GCHRA, there are no minimum or maximum contribution limits. You can set the allowance that works best for your budget.
- You can vary allowances and eligibility by seven employee classes for extra flexibility.
Offering stand-alone HRAs instead of group health insurance
Group health plans come with high premium rates for small employers. When you compare individual and group plan coverage options, it’s easy to see individual health insurance policies in Colorado tend to be more affordable than employer-sponsored policies.
Below are the monthly premiums for a 50-year-old with a silver plan in several Colorado counties in 2024:
|
County |
Small group coverage |
Individual coverage |
|
Garfield County |
$873 |
$703 |
|
Delta County |
$873 |
$648 |
|
Grand County |
$873 |
$581 |
|
Montezuma County |
$723 |
$581 |
|
Saguache County |
$715 |
$640 |
|
Fremont County |
$634 |
$579 |
|
Arapahoe County |
$566 |
$459 |
|
El Paso County |
$541 |
$501 |
All table data from Ideon’s 2024 premium comparison map.
You can break free from traditional group coverage with a stand-alone HRA. In contrast to integrated HRAs, stand-alone HRAs don’t require a traditional group health plan. Instead, you can reimburse employees tax-free for eligible out-of-pocket costs, including individual health plan premiums.
Like integrated HRAs, stand-alone HRAs let you set a monthly allowance and reimburse your staff for eligible expenses. However, you don’t need to buy group coverage. Employees enroll in their preferred individual health plan, and you reimburse them for their premiums.
There are two types of stand-alone HRAs:
Individual coverage HRA (ICHRA)
The ICHRA is for employers of all sizes. There’s no maximum contribution limit, and you can vary allowances and eligibility using employee classes. Employees must have a qualified individual health plan to participate in the benefit. ALEs can also design an ICHRA to satisfy the employer mandate instead of purchasing a costly group policy.
Qualified small employer HRA (QSEHRA)
The QSEHRA is for small employers with fewer than 50 FTEs. While it has no minimum contribution limits, the IRS sets annual maximum limits. Employees must have a medical plan with MEC to participate in the QSEHRA. This is the perfect option for small businesses and nonprofits that are new to offering health benefits.
Stand-alone HRAs are cost-effective alternatives to group plans for small employers in Colorado. 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
Association health plans (AHPs) are another option for small businesses and self-employed individuals with fewer than 50 employees. These plans allow companies to band together—often within the same industry, profession, or region—to buy health insurance as a larger group. This collective approach can make premiums more affordable.
While AHPs function similarly to standard health insurance policies, they aren’t required to follow all ACA regulations. Because of this, AHPs aren’t suitable for ALEs. Additionally, AHPs often provide limited covered services. These restrictions may not may not meet all your employees’ medical needs.
If you’re seeking more flexibility from your health benefits, an HRA might be a better fit.
Supplemental and ancillary health insurance benefits
Supplemental health benefits are optional policies that can strengthen your employee benefits package. While traditional health insurance covers many medical costs, it often doesn’t pay for everything. Supplemental benefits help fill those gaps by covering specific expenses, such as emergency room visits and hospital stays, giving your employees added financial assistance.
It’s important to note that most supplemental plans don’t meet the MEC requirements under the ACA. But they’re an excellent way to enhance the health insurance coverage you offer to your team.
Consider adding ancillary benefits, like dental and vision insurance, for even more comprehensive benefits. These plans can provide extra value and peace of mind for your employees.
Some of the most common types of ancillary and supplement health benefits are:
- Critical illness insurance: This additional benefit covers medical emergencies that regular insurance may not fully cover, such as cancer, stroke, and kidney failure.
- Accident insurance: These policies help pay for medical costs resulting from a covered accident.
- Vision and dental insurance: Most major medical plans don’t cover or fully cover vision or dental expenses for adults. An HRA can also reimburse employees for these expenses.
- Hospital indemnity insurance: These plans help employees pay for hospital confinement costs that standard health plans don’t typically cover.
- Health savings account (HSA): An HSA is an employee-owned account you and your employees can contribute toward. Employees can then use their HSA funds to save and pay for future medical expenses. HSAs require HSA-qualified health insurance plans.
- Flexible spending account (FSA): A healthcare FSA allows you to help pay for your employees’ out-of-pocket medical expenses. It covers many items an HRA does except for insurance premiums.
Average cost of health insurance in Colorado
The cost of group health insurance depends on several factors, including the following:
- Age
- Number of enrolled employees
- Plan type
- Family size
However, individual insurance works differently from group health plans.
The cost of an ACA individual health plan varies by the following factors:
- Age
- Location
- Tobacco use
- Family status
- Metallic tier of coverage.
- For example, bronze plans have lower monthly premiums than gold plans. A catastrophic plan allows eligible employees to save money on their premiums.
The table below shows the average lowest-cost premiums for each metal tier for a 40-year-old in Colorado, according to KFF.
|
Average lowest-cost bronze premium |
Average lowest-cost silver premium |
Average benchmark premium (second-lowest-cost silver plan) |
Average lowest-cost gold premium |
|
$363 |
$455 |
$463 |
$440 |
All public exchange health plans must provide MEC and cover the ACA’s ten essential benefits. Private exchanges offer ACA-compliant plans and non-ACA-compliant plans, such as supplemental benefits.
What plans are available on the individual market in Colorado?
Individuals and families in Colorado searching for health insurance plans have many options on the individual market. Residents can buy a qualified plan on the state’s Marketplace, Connect for Health Colorado. More than 237,106 people enrolled in coverage through the Connect for Health Colorado platform during the 2024 Open Enrollment Period.
The following is a list of insurance carriers offering individual plans in 2025.
|
Insurance company |
On- or off-exchange |
|
Cigna Health and Life Insurance Company |
On-exchange |
|
Denver Health Medical Plan, Inc |
On-exchange |
|
HMO Colorado, Inc. |
On- and off-exchange |
|
Kaiser Foundation Health Plan of Colorado |
On- and off-exchange |
|
Rocky Mountain HMO |
On- and off-exchange |
|
SelectHealth, Inc. |
On-exchange |
All table data from HealthCare.gov’s rate review site.
You can enroll in a plan during the annual Open Enrollment Period, which runs from November 1 through January 15 in Colorado. If you have a qualifying life event, you’ll trigger a special enrollment period and can choose a plan midyear.
Individuals and families with state-based marketplace plans may also be eligible for federal premium tax credits. In 2024, 72% of Colorado residents who enrolled in a plan through the Connect for Health Colorado platform qualified for subsidies.
COBRA in Colorado
The federal Consolidated Omnibus Budget Reconciliation Act of 1985 allows former employees and their dependents to keep their employer-sponsored group health plan for a specific time after a qualifying event.
Here’s how federal COBRA works:
- Eligibility. Former employees who leave, retire, or are let go for reasons other than serious misconduct may qualify for COBRA. Employees who have reduced work hours may also be eligible. Qualified dependents may also receive coverage if the employee dies, gets divorced, becomes eligible for Medicare, or turns 26.
- Duration. Coverage lasts up to 18 months, but eligible individuals can extend it under certain conditions.
- Affected organizations. COBRA applies to all businesses with 20 or more FTEs that offer health coverage to their employees.
Colorado's mini-COBRA law also extends these rules to employers with fewer than 20 employees.
Here’s a snapshot of how mini-COBRA in Colorado works:
- Eligibility. Employees must have participated in their health plan for at least six consecutive months. Those enrolled in the plan for less than six months but more than three months may be eligible for conversion coverage.
- Duration. Continuation coverage can last up to 18 months or until the employee becomes eligible for another group health plan.
- If the new group plan excludes a covered medical condition, coverage can continue for the full 18 months or until the new plan covers the condition.
- Affected organizations. The law applies to all employers with fewer than 20 employees who offer fully-insured plans. Mini-COBRA doesn’t apply to self-funded plans, federal plans, or out-of-state policies.
Under both COBRA laws, the individual—not the employer—must pay the monthly premium. This includes the employer's and employee's share of the premium and administrative fees.
How PeopleKeep can help Colorado employers
If you're a Colorado employer looking for a flexible, cost-effective way to offer health benefits, PeopleKeep makes it easy. Our HRA administration software helps small and mid-sized businesses create and manage customized health benefits that align with their budget and goals.
With PeopleKeep, you can tailor an HRA to meet your company's specific needs while giving employees the freedom to choose the health plans that work best for them. Our platform simplifies the process, helping you control costs while ensuring your employees can access necessary medical care.
We handle the administrative tasks, including reviewing and processing employee reimbursement requests. This saves you valuable time and keeps your business compliant with federal regulations to avoid costly tax penalties.
PeopleKeep can also help your employees find individual health insurance. Once your employees enroll in their QSEHRA or ICHRA benefits, they can browse available plans directly from their PeopleKeep dashboard.
If you work with a broker, you still can! Your broker can sell individual health insurance plans to your employees and assist you in managing your benefits. Your broker can contact us to learn more and set up an HRA for your team.
Ready to enhance your health benefits?
Reach out to an HRA specialist and see in real-time how PeopleKeep’s HRA administration software can help you build a competitive, cost-effective health benefit.