Small business health insurance in Kentucky

Fully-insured traditional group health insurance

Many businesses rely on traditional group health insurance plans because they’re familiar with them. Plus, they allow premium cost-sharing between employers and employees. These plans also let business owners extend coverage to employees’ spouses and dependents to support their families.

Common types of group health insurance plans include:

1. Preferred provider organization plans (PPOs) offer flexibility with a vast network of healthcare providers and some out-of-network coverage at a higher out-of-pocket cost.
2. Health maintenance organization plans (HMOs) require members to stay within a network and receive referrals to see specialists. They typically have lower premiums.
3. Exclusive provider organization plans (EPOs) combine PPO and HMO features. They limit coverage to in-network healthcare providers but don’t require referrals for specialist care.
4. Point of service plans (POSs) function like HMOs with required referrals but provide limited out-of-network coverage at higher costs.

Large employers often benefit from more favorable group plan rates and can more easily meet the usual 70% participation requirement. But smaller Kentucky businesses frequently find the cost prohibitive.

In 2024, the average single coverage premium was $8,951 annually (or $746 per month), while family health plans averaged $25,572 annually (or $2,131 per month)³. Employers usually pay a large portion of premium costs, which can strain already tight benefit budgets.

Kentucky doesn’t use the federal Small Business Health Options Program (SHOP) Marketplace. But employers can get a small group health plan through their state-based exchange, Kynect⁴. Kentucky SHOP plans are available to organizations with fewer than 50 FTEs.

If your business has fewer than 25 FTEs and pays an average annual wage of $56,000 or less, you may be eligible for the small business health care tax credit. To qualify, you must offer SHOP insurance and contribute at least 50% toward employee premiums.

According to HealthCare.gov's rate review site, the following health insurance companies offer small group plans in Kentucky in 2025⁵.

Integrated HRAs

Are you an employer offering group health insurance who wants to enhance your benefits package? If yes, you can supplement your policy with an integrated HRA. Also known as a group coverage HRA (GCHRA), integrated HRAs are available to organizations of any size. However, only employees enrolled in your group health plan can participate in the benefit.

With a GCHRA, employers set a monthly allowance that employees can spend on qualified medical costs that their group plan doesn’t fully cover. Once they prove they bought an eligible expense, you reimburse them tax-free up to their allowance amount. By law, group plan premiums are ineligible for reimbursement.

Eligible expenses under the GCHRA include cost-sharing amounts, such as:

• Deductibles: This is the amount an employee pays before their health insurance company begins covering their medical expenses.
• Coinsurance: This is the percentage of healthcare costs employees are responsible for paying after meeting their annual deductible.
• Copays: This is a fixed fee employees must pay after receiving specific healthcare services and items, like office visits or prescriptions.

GCHRAs can work with any type of group plan, but they pair particularly well with high deductible health plans (HDHPs). HDHPs help employees manage out-of-pocket costs while keeping premiums low.

A major perk of the GCHRA is its flexibility. Allowances aren’t limited, and employers can vary contribution amounts and eligibility using seven employee classes, like location or employment status.

Stand-alone HRAs

When comparing individual and group health plans in Kentucky, individual health insurance coverage is more affordable than employer-sponsored policies.

Below are the monthly premiums for a 50-year-old with a silver plan in some of the most populated Kentucky counties in 2025:

All table data from Ideon’s 2025 premium comparison map⁵.

If you’re looking for a more budget-friendly alternative to group health insurance, stand-alone HRAs are a great choice. In contrast to the GCHRA, stand-alone HRAs allow employers to reimburse employees for individual health insurance policies and other qualifying expenses.

There are two types of stand-alone HRAs you can offer:

1. The individual coverage HRA (ICHRA) is for businesses of any size. There are no minimum or maximum contribution limits. Plus, you can vary allowances and eligibility by employee classes or family status. Employees must have an ACA-qualified individual health plan to participate.
   1. ICHRAs can also allow applicable large employers (ALEs) to meet the employer mandate without purchasing traditional group coverage.
2. The qualified small employer HRA (QSEHRA) is specifically for businesses with fewer than 50 FTEs. It has annual maximum limits, and employees must have a health plan with MEC to use the benefit.

Because individual insurance premiums in Kentucky are more affordable than group rates in all counties, an ICHRA or QSEHRA can provide small businesses with a flexible, scalable way to support employee health without breaking the bank.

Association health plans

With an association health plan (AHP), small businesses and self-employed individuals can buy health insurance by joining forces with similar companies in their industry or region. By pooling together, participants benefit from lower premiums than they could secure independently.

AHPs operate similarly to traditional group health plans. However, they aren’t subject to all the ACA regulations and, therefore, can’t satisfy the employer mandate for ALEs. AHPs can also have limited coverage options, which may not fully support your employees’ medical needs.

If your company is looking for more customizable coverage alternatives, HRAs offer greater flexibility at a more predictable price.

Supplemental and ancillary health insurance benefits

While major medical plans cover many services and items, there can still be gaps. That’s where supplemental and ancillary benefits come in. These benefits provide your workforce with extra financial support and can make your compensation package more appealing.

Most supplemental and ancillary plans don’t provide MEC on their own. But they work well alongside major medical insurance or HRAs to design a more complete health benefit offering.

Here are some popular types of supplemental and ancillary benefits:

• Critical illness insurance offers a lump-sum payment when an enrollee experiences a serious illness, such as cancer or a heart attack. This type of coverage helps offset costs that their major medical plan doesn’t cover.
• Accident insurance covers out-of-pocket expenses related to accidental injuries, such as emergency services.
• Vision and dental insurance are separate plans that cover routine care, such as cleanings, fillings, eye exams, and glasses. These services and items are also eligible for reimbursement with an HRA.
• Hospital indemnity insurance provides plan participants with a fixed dollar amount for each day they spend in a hospital.
• Health savings accounts (HSAs) are tax-advantaged benefits that work only with high-deductible plans. Both employers and employees can contribute to the account, and a wide range of expenses are eligible for purchase.
• Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars for out-of-pocket healthcare costs. Employees can’t use FSA funds to pay for insurance premiums. But FSAs can ease the financial burden of routine medical expenses.

Offering these benefits not only gives your staff added financial and medical security, but it also helps position your business as an employer of choice.