Small business health insurance in Texas

Traditional fully-insured group health insurance

Small businesses in Texas often opt for traditional group health insurance due to their familiarity and the ability to provide employees with essential health benefits and access to large networks of doctors. Employers choose the group plan they want to offer all their employees, and share the cost of premiums with enrolled members at a discounted rate.

There are four main types of group plans:

• Preferred provider organization plans (PPOs). The most common type of plan is a PPO. It gives policyholders a network of preferred providers who offer care at a lower cost. Members can seek care outside of the network, but often at a higher price.
• Health maintenance organization plans (HMOs). HMOs offer a wide range of healthcare services through a network of providers that either contract exclusively with the HMO or agree to provide medical care at a discounted rate. Members must select a primary care physician (PCP) and get referrals to see a specialist.
• Exclusive provider organization plans (EPOs). An EPO combines the preferred provider network of an HMO with the freedom of seeing a specialist without a referral that a PPO offers. However, these plans don’t cover care from out-of-network providers.
• Point of service plans (POSs). With a POS plan, you pay less if you see in-network doctors and specialists. Like an HMO, you need a referral from a primary care doctor to see a specialist.

While group plans are the traditional route for offering benefits, they come with high costs for small employers. In 2025, the average single coverage premium was $9,325 annually ($777/month) and $26,993 annually for family coverage ($2,249/month). Employers typically cover a significant portion of these costs, adding to the financial burden. For example, employers covered 75% of their employees’ family insurance premiums on average in 2025³.

Group plans also typically require at least 70% of your employees to opt into coverage. In Texas, 75% of employees must enroll in your group plan or have coverage from another source. Otherwise, you can’t offer the plan.

Texas small employers seeking group health insurance can shop for a plan on the federal Small Business Health Options Program (SHOP) Marketplace. Small group plans are only for businesses with fewer than 50 FTEs.

If you have fewer than 25 FTEs and pay an average annual salary of $56,000 or less per employee, you may qualify for the small business health care tax credit. To qualify, you must offer SHOP marketplace coverage and pay at least 50% of your employees’ premiums. You can use the Marketplace’s Small Business Tax Credit Calculator to determine your eligibility for the federal tax credits.

Unfortunately, Texas doesn’t have any on-exchange SHOP plans available at this time. However, there are small group plans available. According to HealthCare.gov's rate review site, the following health insurance companies offer small group plans in Texas in 2026⁴.

Integrated HRAs

Texas small employers that want to keep offering a group health insurance plan can enhance their coverage with an integrated HRA. Sometimes referred to as a group coverage HRA (GCHRA), this type of benefit is available to employers of any size that already offer a group plan. Only employees who are participating in your group policy can use the HRA.

A GCHRA lets you set aside a monthly, tax-free reimbursement amount that employees can use for eligible medical expenses. After an employee submits proof of a qualified out-of-pocket cost, you reimburse them up to their allowance. However, premiums are ineligible for reimbursement with a GCHRA.

Employees can use the allowance for expenses that your group insurance plan doesn’t fully take care of, including:

• Deductibles: This is the portion that employees must pay out of pocket before their insurance carrier starts contributing to their healthcare costs.
• Coinsurance: This is the percentage of a medical bill that employees are responsible for after they have met their annual deductible.
• Coinsurance: This is a flat amount that employees will pay when they receive certain covered services.

Texas employers of any size and industry can design a GCHRA to fit the needs and budget of their organization. You can pair this type of HRA with any kind of group policy, but it’s beneficial when paired with high deductible health plans (HDHPs). This approach can help offset higher upfront costs for employees while allowing employers to take advantage of lower premiums.

Unlike other HRA types, GCHRAs don’t come with set minimum or maximum contribution requirements. That gives employers more flexibility to design the benefit in a way that aligns with their financial goals. You can also tailor reimbursements and eligibility across seven employee classes for even more customization.

Stand-alone HRAs

If you compare individual and group health plans in Texas, you’ll notice that individual healthcare coverage is more affordable than employer-sponsored policies.

Below are the monthly premiums for a 50-year-old with a silver plan in a few Texas counties in 2026:

All table data from Ideon’s 2026 premium comparison map⁵.

Stand-alone HRAs give employees the freedom to purchase their own individual health insurance, while employers reimburse them for premiums and qualified medical expenses. This type of HRA allows businesses to offer meaningful health benefits without committing to a traditional group policy, creating both cost predictability and flexibility.

There are two main types of stand-alone HRAs:

1. Available to employers of any size, the individual coverage HRA (ICHRA) has no set minimum or maximum funding requirements, making it easy to tailor to your budget. You can structure the benefit by employee classes, age, or family status—such as offering different allowances for single employees versus employees with dependents. Employees must have a qualifying individual health insurance plan to use this benefit.
   1. For ALEs, an ICHRA can also be an affordable alternative to group insurance when meeting ACA employer mandate requirements.
2. Designed for businesses with fewer than 50 full-time employees, a qualified small employer HRA (QSEHRA) has no minimum contribution requirement but does have IRS-set annual maximum caps. To participate, employees must have a health plan that provides minimum essential coverage (MEC).

Since individual premiums are typically more affordable than small group rates across several Texas counties, HRAs provide a robust solution for budget-conscious organizations.

Self-funded health plans

A self-funded approach lets Texas employers design and finance their own group health plan directly. While this offers more control over plan features and spending, it also means taking on additional risk and handling extra administrative responsibilities.

To help balance those risks, many smaller employers consider level-funded plans—an option that blends self-funding with stop-loss coverage from an insurance carrier. Even so, the potential for unpredictable claims costs and increased administrative work may make self-funded options less appealing for small companies with limited budgets and resources.

Instead of offering a self-funded group plan, you can offer a stand-alone HRA like the ICHRA. This allows you to reduce risk while still having control over your budget.

Association health plans

Association health plans (AHPs) allow small employers and self-employed individuals to band together—typically through a shared industry or region—to purchase health coverage as a larger group. Pooling resources can sometimes lead to lower premiums or more favorable insurance terms.

AHPs operate similarly to standard group health insurance, but they don’t always have to comply with every ACA requirement and generally aren’t available to ALEs. It’s also worth keeping in mind that AHPs may come with more limited benefit choices, which may not meet the needs of all employees.

For organizations seeking more customization or greater cost control, an HRA is often the more adaptable and budget-friendly option.

Supplemental and ancillary benefits

Texas employers can strengthen their overall benefits strategy by adding supplemental or ancillary coverage alongside their core health insurance offering. These add-on plans fill gaps in major medical coverage or provide financial protection for specific events or services that traditional insurance doesn’t fully address.

Although many of these options don’t qualify as MEC, they can easily complement major medical plans or be paired with HRAs to create a more complete benefits package.

Common supplemental and ancillary options include:

• Critical illness insurance helps employees manage costs after being diagnosed with a serious health condition like cancer, stroke, or heart disease.
• Accident insurance provides financial support for unexpected injuries that lead to out-of-pocket expenses.
• Dental and vision insurance are stand-alone policies that cover preventative and essential services not included in most major medical plans. Many dental and vision expenses are also eligible expenses through an HRA.
• Hospital indemnity insurance offers a fixed payment to help offset costs from hospital stays that their major medical plan doesn’t fully cover.
• Health savings accounts (HSAs) are tax-advantaged accounts available to employees enrolled in HSA-qualified health plans. Both employers and employees can contribute to the HSA; however, the employee always owns the account and any funds within it, which they can use to buy current or future healthcare costs.
• Flexible spending accounts (FSAs) let employees set aside pre-tax money for eligible medical costs, although FSA dollars generally can’t be used to pay insurance premiums.

These additional plans improve the overall quality of care for employees and can also distinguish your organization’s benefits package from competitors.

Individuals and families in Texas searching for health insurance plans can shop for a policy on the individual market. Residents can buy a qualified plan on the federal Health Insurance Marketplace, HealthCare.gov⁶. Almost 4 million Texas residents enrolled in coverage through the Health Insurance Marketplace during the 2025 Open Enrollment Period.

The following is a list of health insurance carriers offering individual plans in 2026.

All table data from HealthCare.gov’s rate review site⁷ and Ideon’s Planwatch⁸.

You can enroll in an individual health plan during the annual Open Enrollment Period, which runs from November 1 through January 15 in Texas. If you have a qualifying life event, you’ll trigger a special enrollment period and can choose a new health plan midyear.

Individuals may also qualify for federal premium tax credits. In 2025, about 95% of Texas residents enrolled in a plan through the HealthCare.gov website qualified for subsidies. However, with the enhanced tax credits set to expire at the end of 2025, the number of individuals qualified for subsidies is likely to decrease.

If an employee loses access to employer-sponsored health insurance, they may be able to temporarily continue that coverage through the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

How federal COBRA works:

• Eligibility. Employees who quit, retire, or are laid off for reasons other than gross misconduct may qualify. Spouses and dependents may also be eligible due to events such as divorce, the employee’s death, or a dependent child turning 26.
• Length of coverage. Continuation benefits typically last up to 18 months, with longer extensions available under certain situations.
• Affected organizations. Federal COBRA applies to employers with 20 or more employees offering fully insured group health plans. Self-funded plans are generally exempt.
• Cost. Former employees/qualifying dependents must pay the entire premium amount themselves, plus a small administrative surcharge.

In addition to federal COBRA law, Texas has its own continuation coverage law, often referred to as Texas “mini-COBRA”, to help workers at small businesses keep their insurance for a limited time.

Overview of Texas mini-COBRA:

• Eligibility. Employees who leave their job, whether voluntary or involuntary, may qualify if they were enrolled in the employer’s group health plan for at least three months beforehand. Dependents may also be eligible due to divorce, the employee’s death, or aging out of the plan at age 26.
• Duration. Mini-COBRA coverage lasts at least nine months after a qualifying event. After that, they can apply for an additional six-month extension.
• Affected organizations. The law applies to small employers with fewer than 20 employees that offer fully insured health plans.
• Cost. Individuals are responsible for the full monthly premium, which includes both the employer and employee portions, as well as an administrative fee.