Health insurance for small business: options and costs in 2026

Four ways to offer health insurance

Premiums are the largest line under every route, and no carrier, PEO or payroll provider in our research published them. We do not print an average premium we cannot date and source. What we can show is the admin layer, the rules, and what buyers report after they sign.

What it costs: admin fees for 5, 10 and 25 employees

Other providers list benefits administration without a price: QuickBooks Workforce says benefits administration has "limited availability, additional fees apply," Square Payroll lists a health add-on without a price, and Gusto lists benefits administration among its features (pricing pages, checked October 16, 2026). TriNet states its medical, dental and vision premiums are separate from its per-employee fee.

Small group premiums depend on the plan design, the carrier's network, where you are and who enrolls. Get quotes from at least two carriers for the same plan level so you can compare like for like. Add premiums, wages and payroll taxes together in the employee cost calculator; employer tax rates are in 2026 payroll tax rates.

PEO plan or your own group plan?

This is the question buyers ask most about PEO benefits, and the evidence cuts both ways:

• For the PEO: one founder on Hacker News said TriNet plans were about 30% cheaper than Zenefits quotes for the same carrier, another said TriNet gave access to PPOs with out-of-network coverage, and a TriNet customer on Trustpilot credits the PEO for "affordable benefits" (August 28, 2026).
• Against: an ADP TotalSource reviewer found a better policy at about 75% of the cost by shopping alone, another was "limited to just Aetna health plans that increase every year" (Capterra, May 24, 2024 and March 31, 2025), and a TriNet reviewer called benefits "a little higher than the other companies" (Capterra, October 5, 2026).

Under a certified PEO, the small employer health insurance credit stays with you, not the PEO (26 USC 3511(d)). Check any PEO against the IRS certified PEO list. The full PEO bill is in PEO cost per employee, the scored list in best PEO companies, and the trade-off in PEO vs payroll plus a broker.

ICHRA and QSEHRA instead of a group plan

Both let you give employees money for coverage they buy themselves, so you skip the group renewal.

• ICHRA: no federal dollar cap, different amounts by class (full-time, part-time, salaried, hourly and others), older workers up to 3 times the youngest worker's amount, written notice 90 days before the plan year. A class cannot get both the ICHRA and your group plan (26 CFR 54.9802-4). Details: how an ICHRA works.
• QSEHRA: for small employers with no group plan, capped in 2026 at $6,450 self-only and $13,100 family, which is $537.50 and $1,091.67 a month (IRS Rev. Proc. 2025-32). Details: QSEHRA limits and rules.

Neither Take Command nor Thatch pricing was in our research on October 16, 2026, so ask for per-employee fees, minimums and cancellation terms in writing.

HSA, HDHP and FSA limits for 2026

An HSA only works with a qualifying high-deductible plan, so the deductible and out-of-pocket rows decide whether a plan your broker or PEO offers is HSA-eligible.

Benefits administration software: what goes wrong

Benefits admin lives inside payroll for most small teams, and the complaints are about deductions, not features:

• Check the first two payrolls after open enrollment line by line.
• Ask who fixes a wrong deduction and how fast the refund reaches the employee.
• Ask how FSA claims are reviewed and what proof is required.

Payroll prices with and without benefits add-ons are in payroll software compared.

Switching plans or leaving a PEO

Buyers ask how to leave a PEO "without losing our 401(k) or health plan mid-year." The safe window is your plan renewal date: line up the new plan, the new payroll and the 401(k) move before you give notice. Reviewers describe keeping ADP payroll and dropping TotalSource ("Use ADP for payroll but nothing else," Capterra, June 3, 2024).

• Get the PEO's notice period and any early termination fee in writing.
• Ask what happens to FSA balances and claims in flight.
• Plan the retirement plan move; see 401(k) options for small businesses.
• If you also move workers' comp off the PEO, price it first: how workers' comp is priced.

Common mistakes

• Comparing admin fees and ignoring premiums. A $45 per employee difference between Justworks PEO Basic ($79) and PEO Plus ($124) is small next to the premium.
• Taking the first renewal. Ask for a market check every year, especially after an increase.
• Mixing an ICHRA and a group plan in one class. Not allowed under 26 CFR 54.9802-4.
• Keeping a group plan for a few people and adding a QSEHRA. A QSEHRA is only for employers with no group plan.
• Not checking deductions after enrollment. Duplicate and wrong deductions are a recurring complaint.

Hiring for the first time? Hiring your first employee puts benefits in order with payroll and registrations.