Small business health insurance in Minnesota

Understanding your options is more important than ever. This guide explains the health coverage paths available to Minnesota small businesses, including modern, cost-controlled alternatives, so you can make informed decisions that support both your employees and your bottom line.

Unlike larger companies, small businesses face unique challenges with health insurance coverage. Today, employers have more flexibility than ever in how they structure benefits.

Here are a few ways small businesses can provide health coverage:

• Traditional group health insurance
• HRAs
• Health stipends
• Ancillary benefits, like vision and dental plans, health savings accounts (HSAs), and flexible spending accounts (FSAs)

Group health insurance plans in Minnesota

Traditional group plans have been a common choice for organizations of various sizes for many years. With a fully-insured plan, the employer and employees usually split the cost of the plan, with the employer paying a larger share of the monthly premiums. An employer may also choose to make coverage available to spouses and dependents.

In Minnesota, group plans can come in one of the following forms:

• Preferred provider organization plans (PPOs): PPOs are the most common type of plan. They offer policyholders access to a network of preferred healthcare providers. Members can receive care from outside networks, but it comes at an extra cost.
• Health maintenance organization plans (HMOs): An HMO plan offers a wide range of healthcare services through specific provider networks. Members must select a primary care physician (PCP). Their PCP manages healthcare needs and gives referrals to specialists when necessary.
• Exclusive provider organization plans (EPOs): EPOs combine elements of both HMOs and PPOs. Members have access to healthcare services from a specific network of providers and can see specialists without needing a referral. An EPO doesn't cover care from out-of-network providers.
• Point of service plans (POSs): In-network doctor visits are cheaper with a POS plan, but out-of-network care is also covered. Members need a referral from a primary care physician to see a specialist, just like with an HMO.

The ideal plan for you and your employees depends on your preferences and budget.

Employers with a large enough group of employees can typically access lower group health insurance premiums because risk is distributed among all members of their group. You usually need about 70% of your employees to sign up to meet participation requirements.

Employers and employees share the cost of premiums. According to KFF’s 2025 Employer Health Benefits Survey⁴, employers cover about 84% of self-only premiums and roughly 74% of family coverage premiums, with employees contributing the remaining share.

If the standard group health plan costs too much for your organization, you may prefer a high deductible health plan (HDHP). These health plans come at a more affordable price since they offer lower monthly costs for both employers and employees. But, they come with higher deductibles that employees have to pay before the insurance company starts to help with their expenses.

While HDHPs offer cost savings, the higher deductible might lead to increased costs for your employees. In this case, you can offer a group coverage HRA (GCHRA), also known as an integrated HRA, alongside an HDHP. With a GCHRA, you can reimburse your employees for their out-of-pocket costs, such as deductibles, tax-free. A GCHRA eases employee stress and saves money for everyone.

The Small Business Health Options Program (SHOP) marketplaces offer small group health insurance plans that may also help you save money. Minnesota employers with fewer than 50 FTEs can access SHOP plans through a broker or from an insurance company directly. Minnesota doesn’t have a public SHOP exchange for small businesses. If you have fewer than 25 employees who earn less than $50,000 annually, you may qualify for the Small Business Health Care Tax Credit.

The following companies will offer small group health plans in Minnesota in 2026, according to HealthCare.gov’s rate review⁵ website.

Employers aren’t limited to fully-insured group plans. They can also offer self-funded health plans. While self-funding means you don’t have to pay premiums to an insurance carrier (unless you contract with one to manage the plan), it isn’t the most cost-effective or safe option for small businesses.

With self-funded models, you’re responsible for paying out employee medical claims. Many small businesses can’t handle the risk of high medical claims. While you can pair a self-funded plan with stop-loss insurance, it doesn’t provide the level of savings or flexibility that a stand-alone HRA provides.

How to take advantage of individual health insurance with an HRA

Employers can save money by forgoing a traditional group health plan. Instead, they can use HRAs to reimburse employees for their medical expenses and individual health plan premiums.

Some examples of HRA-eligible expenses include:

• Monthly premiums for health, vision, and dental plans
• Preventive care
• Emergency care
• Chiropractic care
• Mental health services
• Prescription drugs
• Over-the-counter medication

Two of the most popular stand-alone HRAs are:

• The individual coverage HRA (ICHRA): The ICHRA is for employers of all sizes. With no annual limits on employer contributions, you can offer as much as you want in allowances. You can also differ allowances and eligibility based on 11 employee classes, such as full-time and seasonal workers. Employees need their own individual health insurance plans to participate in the ICHRA.
• The qualified small employer HRA (QSEHRA): The QSEHRA is only for small businesses with fewer than 50 FTEs. The IRS sets a maximum limit on employer contributions. It's updated annually to account for inflation. Employees don't need individual health insurance plans to participate in the QSERHA, just MEC. This means they can still participate if they're on a parent or spouse's plan.

Health stipends

Employers can also offer employees health stipends for their medical expenses. A stipend is extra money for your employees. They're a flexible way to help them pay for out-of-pocket costs, such as premiums, items, and services that an HRA or group plan doesn’t cover.

However, there are some drawbacks to stipends:

• The IRS considers them taxable income.
• Federal regulations don't allow you to ask for proof of insurance or receipts for items listed in IRS Publication 502.
• Stipends don't meet the requirements of the employer mandate. Companies with 50 or more FTEs can incur financial penalties if they offer a stipend instead of insurance or an ICHRA.

Stipends can be a good option for small organizations that want to supplement their existing health benefits.

Ancillary and supplemental plans

Health insurance is great, but it doesn't cover everything. You can help your employees out by offering extra perks, known as ancillary benefits, in addition to health coverage.

Here are some common types of ancillary and supplemental health benefits:

• Critical illness insurance: Critical illness insurance offers coverage for serious medical issues like cancer, stroke, and kidney failure that may not be fully included in traditional health insurance plans. It provides a lump sum to cover medical bills or lost wages.
• Vision insurance: Most health plans don't cover vision costs like glasses and exams. Adding vision coverage can benefit your employees. You can also reimburse employees for these expenses using an HRA.
• Dental coverage: Typically, group and individual medical plans don't cover adult dental care, much like vision coverage. Offering dental insurance can help your employees manage costs for exams, fillings, and other services. You can also use an HRA to reimburse employees for these expenses.
• Health savings account (HSA): An HSA is an employee-owned account that both you and your employees can contribute pre-tax dollars to. Employees can use the funds in their HSAs to pay for future medical expenses.
• Flexible spending account (FSA): A healthcare FSA helps cover your employees' out-of-pocket expenses for medical care. It includes most of the same items as an HRA, except for health insurance premiums.

Offering a QSEHRA or ICHRA as part of your health benefits allows employees to use their allowances for vision, dental, and other types of supplemental coverage in addition to their health insurance plans.

The cost of individual plans depends on age, location, insurance provider, and the metallic tier of coverage. Generally, bronze plans have lower monthly costs than silver or gold plans, but they also have higher deductibles.