Small business health insurance in Washington

Importance of small business health insurance

Including health insurance in your employee benefits package can help your organization stand out to job candidates and create a healthier workforce. In the sections below, we’ll review why providing health benefits is a strategic decision for your business.

The employer mandate

Federal law requires businesses with at least 50 full-time equivalent employees (FTEs) to provide health insurance to their staff. The Affordable Care Act (ACA) imposes specific requirements on applicable large employers (ALEs).

Here’s a summary of the employer mandate:

• Employers with 50 or more FTEs must offer affordable health insurance that meets minimum essential coverage (MEC) to at least 95% of their full-time employees and their dependents.
  • An ALE may face tax penalties if they fail to meet this requirement and at least one employee purchases subsidized coverage on a public exchange.
• ALEs must ensure their health plans cover at least 60% of the average medical costs for a standard population to meet the minimum value requirement.

While the ACA doesn’t mandate health insurance for smaller businesses and nonprofits, offering health benefits can help attract and retain talented employees in a competitive labor market.

Benefits of providing health insurance to employees

Offering health coverage provides numerous advantages beyond simply meeting employer mandate requirements.

Here are some key benefits of providing comprehensive health benefits:

1. Increasing employee satisfaction and retention. Employees who feel valued and supported are more likely to remain with your company, reducing turnover and minimizing the costs associated with recruiting and training new hires.
2. Attracting top talent. A strong benefits package is a major factor for job seekers. Our 2024 Employee Benefits Survey found that 81% of employees consider benefits crucial when evaluating job offers, and 92% prioritize health benefits.
3. Improving productivity and well-being. Health coverage enables employees to access necessary medical care so they can stay focused and effective at work. Healthier employees also experience fewer sick days and less work-related stress, leading to better job performance.

By investing in health benefits, you’ll create a supportive work environment that improves loyalty and enhances your team’s productivity.

Small business health insurance options in Washington

Many health insurance options are available in Washington, and they all have different pros and cons. So, it’s vital to research each option before choosing one.

Group health insurance in Washington State

Many small businesses in Washington provide traditional group health insurance to their employees. These plans enable employers to share premium costs with their staff, making health coverage more affordable for large groups. Additionally, you can extend a group plan to your employees’ spouses and dependents for added value.

Group health insurance plans typically fall into one of these network types:

• Preferred provider organization plans (PPOs): PPOs are among the most popular options. They offer access to a network of providers at discounted rates. These plans also cover out-of-network care, though at a higher cost.
• Health maintenance organization plans (HMOs): HMOs rely on a defined network of providers who either work exclusively with the HMO or have contracts 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): POS plans encourage using in-network providers for lower costs. But, members must get a referral from a primary care physician for specialist visits.

Larger businesses have a better chance of finding affordable group plans because they can spread risk across a larger employee base, which can lower premiums. However, many health insurance companies require at least 70% of eligible workers to enroll in the policy. Reaching this threshold can be challenging for smaller companies.

Group health insurance can also be a significant expense for small businesses. KFF found that employers cover 84% of premiums for individual plans and 75% for family plans on average in 2024. These costs can quickly escalate depending on the number of participants.

If you’re considering choosing a group plan for your company, you must know where to go. Small group plans are available for organizations with fewer than 50 FTEs. Washington doesn’t have a Small Business Health Options Program (SHOP) Marketplace. But, employers can get a small group health plan directly from an insurance company or work with a broker.

According to HealthCare.gov's rate review site, the following health insurance companies offer small group plans in Washington in 2025. The availability of these plans varies by county and rating area.

According to KFF, the average annual premium in 2024 was $8,951 for self-only coverage (or $746 per month) and $25,572 for a family plan (or $2,131 per month). These high prices may make a group plan too much of a financial hardship for small businesses. If you’re looking for a more manageable way to provide health benefits, you may want to explore other options.

Integrated HRAs

If you’re considering offering a group health plan, you can enhance it with an integrated HRA. Also called a group coverage HRA (GCHRA), this health benefit is for Washington employers of any size that offer a group plan. Only employees enrolled in your group policy can participate.

With this 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 medical 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 healthcare costs.
• Coinsurance: This is the percentage of costs you must pay for a covered medical service after meeting your annual deductible.
• Copays: This is a fixed amount you must pay for covered services and items after receiving medical care.

One of the main advantages of a GCHRA is its flexibility, allowing you to tailor it to your company’s unique needs.

Here’s how you can customize a GCHRA:

• GCHRAs work with any group health plan but are particularly beneficial when paired with a high deductible health plan (HDHP). The HDHP helps reduce premium costs, while the GCHRA assists employees in managing higher deductibles.
• There are no minimum or maximum limits for GCHRA allowances. This gives you the freedom to set amounts that align with your budget.
• You can vary allowances and eligibility by seven employee classes for extra personalization.

Offering stand-alone HRAs instead of group health insurance

Instead of getting group coverage, your employees can enroll in individual health plans.

When you compare individual and group plan coverage options, it’s easy to see individual health insurance policies in Washington State tend to be more affordable than employer-sponsored policies. In fact, silver-level individual health insurance premiums are cheaper on average than small group coverage in all but two counties.

Below are the monthly premium costs for a 50-year-old with a silver plan in several Washington counties in 2025:

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

You can break free from traditional employer-sponsored health insurance with a stand-alone HRA. Unlike integrated HRAs, stand-alone HRAs don’t require a group health plan. Instead, you can reimburse employees tax-free for eligible out-of-pocket costs, including individual health insurance premiums.

Like integrated HRAs, stand-alone HRAs let you set a monthly allowance and reimburse your staff for eligible medical expenses. Employees enroll in their preferred individual health coverage, and you reimburse them for their premiums and other medical costs.

There are two types of stand-alone HRAs:

What plans are available on the individual market in Washington?

Individuals and families in Washington searching for health insurance plans have many options on the individual market. Residents can buy a qualified plan on the state’s Marketplace, Washington Healthplanfinder. Roughly 272,494 people enrolled in coverage through the Washington Healthplanfinder platform during the 2024 Open Enrollment Period.

The following is a list of insurance carriers offering individual plans in 2025.

All table data from HealthCare.gov’s rate review site.

You can enroll in a plan during the annual Open Enrollment Period, which is from November 1 through January 15 in Washington. 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 Washington residents who enrolled in a plan through the Washington Healthplanfinder platform qualified for subsidies.

How PeopleKeep can help Washington employers

If you’re seeking a flexible and affordable way to provide health insurance in Washington, PeopleKeep offers a simple solution. Our HRA management software enables small and mid-sized businesses to design and administer tailored health benefits that fit their budget and objectives.

With PeopleKeep, you can customize an HRA to suit your company’s unique needs. Your employees can then choose the health plans that are best for them. Our platform streamlines the process, allowing you to control costs while ensuring employees receive essential healthcare.

We handle the administrative tasks, including reviewing and processing employee claims for reimbursements. This saves you time and ensures your business complies with federal regulations.

We also allow employees to enroll in health and ancillary coverage from within our user-friendly platform. If you want to work with a broker, no problem! Your broker can still sell individual health insurance plans to your employees and help manage your benefits. Simply have your broker contact us to learn more and set up an HRA for your staff.