Coverage options for sole proprietors, LLC owners, and small employers.
Health insurance options for small business owners depend primarily on whether you have employees. A sole proprietor or single-member LLC with no employees is in the same position as any other self-employed individual: the ACA marketplace with potential subsidies and the self-employment health insurance deduction. A business owner with employees has additional options (and potentially responsibilities) around group health insurance.
Self-employed business owners (sole proprietors, partners, S-corp shareholders who own more than 2%) can deduct 100% of health insurance premiums for themselves, their spouse, and dependents as an above-the-line deduction on their federal return. This deduction cannot exceed net self-employment income, and is not available if you (or your spouse) are eligible for employer coverage through another job.
The Small Business Health Options Program (SHOP) allows businesses with 1–50 employees to offer ACA-compliant group health insurance. SHOP plans are available through healthcare.gov and licensed brokers. Small employers with fewer than 25 full-time equivalent employees and average wages below $56,000 may qualify for the Small Business Health Care Tax Credit — worth up to 50% of premium contributions for two consecutive years.
A Qualified Small Employer HRA (QSEHRA) allows businesses with fewer than 50 employees to reimburse employees tax-free for individual health insurance premiums (up to $6,350/individual or $12,800/family in 2026). This lets employees choose their own ACA marketplace plans while the business contributes to the cost — without the administrative complexity of a group plan.
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