More and more, small businesses are setting up programs to reimburse employees for personal health insurance expenses, instead of contributing to a group health insurance plan. 
Personal health insurance reimbursement is gaining popularity among small businesses because:
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Small businesses want to offer health benefits, but traditional group health insurance costs are unaffordable. Barely half of small businesses offer traditional health insurance, with the number one reason they don't being cost.
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Personal health insurance is better for employees because it offers choice and portability. And, personal health insurance policies are now guaranteed-issue.
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Compared with group health insurance, personal health insurance policies cost less.
Two Core Options for Personal Health Insurance Reimbursement
As a small business considers reimbursing employees' personal health insurance, there are two main ways to approach a formalized reimbursement program.
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Taxable Health Care Allowance - With this approach, the small business reimburses employees for their substantiated personal health insurance costs on a post-tax basis up to a healthcare allowance specified by the company.
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Tax-free Health Reimbursement Plan (HRP) - With this approach, an employer utilizes Section 105 of the Internal Revenue Code to establish a formal self-insured medical reimbursement plan to reimburse employees for their substantiated individual health insurance costs on a pre-tax
basis. This type of plan is sometimes called a Healthcare Reimbursement Plan (HRP). This type of plan must be designed to comply with the Affordable Care Act's Market Reforms.
Some businesses also consider simply giving employees taxable raises or bonuses with the hope that employees will use it on healthcare. However, this usually causes more headaches than it's worth. See: 4 Pitfalls of Increasing Wages for Health Insurance.
