Group health insurance is a health plan an employer buys for its whole team, instead of each person shopping on their own. It’s the most common way Americans under 65 get coverage, covering about 154 million people, according to KFF.
The idea is simple: spread the risk. When an insurer covers a whole group, the healthy members balance out the ones who need more care in a given year. That makes costs more predictable, which usually means better coverage at a lower price than most people could find alone.
It also comes with a few built-in protections:
- No health questions for employees. Pre-existing conditions don’t change your price or keep you from enrolling.
- Tax savings. The employer’s share isn’t taxed as income, and the employee’s share is usually taken out of paychecks before taxes.
- Extras in one place. Dental, vision, life, and disability coverage are often bundled in at group rates.
What it costs and who pays
The average family plan cost almost $27,000 in 2025, and employers paid about three-quarters of it.
For single coverage, the average yearly premium was $9,325, and employees paid about $1,440 of it, or 16%. For family coverage, the average premium was $26,993, and employees paid about $6,850, or 26%.
Company size makes a big difference for families. At small firms (10 to 199 workers), employees paid 36% of the family premium on average, compared with 23% at larger firms. For single coverage, the employee share was 16% at both.
Premiums are only part of the picture. The average deductible for single coverage was $1,886, and $2,631 at small firms. Costs are also expected to rise faster in 2026, with employers pointing to hospital prices and new drugs like GLP-1s.
Common plan types
Most group plans fall into one of four types. The main trade-off is flexibility versus cost.
PPO. You can see any doctor without a referral, and in-network care costs less. Out-of-network care is covered at a higher cost. This is the most popular option, covering 46% of workers.
HDHP with an HSA or HRA. You pay a lower premium in exchange for a higher deductible, and the plan comes with a tax-advantaged savings account. About 33% of workers are in one.
HMO or EPO. These cost less but keep you within a set network, with out-of-network care covered only in emergencies. HMOs usually require referrals to see specialists. About 12% of workers choose these.
POS. A primary care doctor coordinates your care, and there’s some coverage outside the network at a higher cost. About 9% of workers are in a POS plan.
If you choose a high-deductible plan with an HSA, you can contribute up to $4,400 (self-only) or $8,750 (family) in 2026. That money goes in tax-free, grows tax-free, and comes out tax-free for medical costs.
Rules employers should know
Whether you’re required to offer coverage depends mostly on size.
- Fewer than 50 full-time-equivalent employees: No federal requirement. Many small businesses offer coverage anyway to hire and keep good people.
- 50 or more: Under the ACA, you must offer affordable coverage to at least 95% of full-time staff or risk a penalty. For 2026, coverage counts as affordable if the employee’s cost for the cheapest single plan is no more than 9.96% of household income. Penalties run up to $3,340 or $5,010 per employee.
- Fewer than 25 employees: You may qualify for the Small Business Health Care Tax Credit, worth up to 50% of the premiums you pay, for two years. In 2026, average wages must be under about $68,200, and the plan generally must come through the SHOP Marketplace.
If you have 20 or more employees, federal COBRA rules also let departing workers keep their coverage for a period, usually up to 18 months, at their own cost.
Setting up or renewing a plan
Whether you’re offering coverage for the first time or reviewing a renewal, the process looks about the same.
- Know your team. Gather headcount, ages, ZIP codes, and what employees care about most, like keeping their doctors or lower monthly costs.
- Set a budget. Decide how much of the premium you’ll cover. Many employers pay at least half of single coverage.
- Compare more than one option. Look at several carriers and plan designs side by side, not just your current carrier’s renewal offer.
- Check the details. Review networks, prescription coverage, deductibles, and out-of-pocket limits.
- Plan enrollment. Give employees clear explanations and enough time to choose.
You don’t have to do this alone. A licensed independent broker can shop the market for you, explain the trade-offs, handle enrollment, and help with claims and compliance throughout the year. If you’d like help, Bendeen Insurance works with employers of all sizes on exactly this, from first-time plans to renewals. Group plans can start in any month, so there’s no need to wait for a particular time of year.
This article is general information, not legal, tax, or financial advice.
