What are the health insurance options for business owners?
A small business owner can either sponsor a group health plan for the company, fund an Individual Coverage HRA (ICHRA) so employees buy their own private ACA plans, or buy an individual ACA-compliant plan personally as a self-employed private buyer (HealthCare.gov; IRS Notice 2020-33).
Reviewed by Jason Burns, Editor & Steward · Last verified 2026-07-19
What it means
- Sole proprietors and single-member LLCs typically buy an individual private plan and use the self-employed health insurance deduction.
- Owners with W-2 employees can offer group coverage or ICHRA reimbursements.
- S-corporation shareholder-employees follow special W-2 reporting for premiums (IRS Notice 2008-1).
Action steps
- Decide whether the plan is for you alone, you plus family, or you plus a W-2 workforce.
- If you have employees, price out group coverage vs an ICHRA vs a raise-in-lieu.
- Coordinate with a CPA before year-end so premiums are deducted correctly.
Risks & deadlines
- Group health plans have ERISA reporting duties above certain sizes.
- ICHRA class rules restrict how you can vary allowances by employee category.
Sources
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