No Employees? Effective Strategies for Small Business Health Insurance

# Blog: No Employees? Here’s How Small Business Owners Actually Get Health Insurance

You own a business. Maybe it’s just you. Maybe you have a few people, but not enough to offer group plans.

And you’re probably thinking: “I can’t afford health insurance.”

That’s not true. You actually have some really good options — and tax deductions — that most business owners don’t know about.

Option 1: Self-Employed Health Insurance Deduction

This is the foundation. If you’re a sole proprietor or S-corp owner, you can deduct 100% of your health insurance premiums as a business expense.

How it works:

• Premium cost: $400/month = $4,800/year

• You’re in the 24% tax bracket

• Deduction saves you: $1,152/year

• Your actual cost: $4,800 – $1,152 = $3,648/year

This applies to premiums for you, your spouse, and your dependents.

Why this matters: You’re not paying for health insurance with after-tax dollars like a W-2 employee. You’re paying with pre-tax business income. That’s a huge difference.

Option 3: Private Health Plans + HRA-105

This is the power move most solo business owners should consider.

What it is:

• You buy an affordable private health plan ($150–300/month)

• You set up a Health Reimbursement Arrangement (HRA-105) under IRS Code Section 105

• You reimburse yourself for medical expenses tax-free using business funds

Example math:

• Private plan premium: $250/month = $3,000/year

• Your deductible under the plan: $5,000

• Out-of-pocket medical costs during the year: $3,500 (doctor visits, prescriptions, dental)

• You reimburse yourself $3,500 from the business

• Total business deduction: $3,000 + $3,500 = $6,500

• At 24% bracket: $1,560 in tax savings

• Your actual health cost: $6,500 – $1,560 = $4,940

Compare that to a marketplace plan at $280/month = $3,360/year with no HRA option. You just saved over $1,600.

Pros:

• Lowest monthly premiums

• Pair with HRA for massive tax deductions

• Nationwide coverage (good if you travel)

• No waiting on subsidies or income verification

Cons:

• Not eligible for marketplace subsidies

• Requires proper HRA documentation (but it’s simple)

• Narrower networks than marketplace (but many private plans are nationwide anyway)

When to use it: This is usually the best choice for solo/small business owners — especially if you have any out-of-pocket medical expenses.

Option 4: Spouse’s Employer Plan

If your spouse has a job with health insurance, sometimes you can be on their plan.

Pros:

• Group plan access

• Potentially lower premiums

Cons:

• You can’t claim the self-employed health insurance deduction if you’re covered under an employer plan

• Limited choice (whatever plan their employer offers)

When to use it: If your spouse’s plan is affordable and comprehensive. Otherwise, a private plan or marketplace plan is better.

The Comparison Chart

OptionMonthly CostAfter-Tax Cost*DeductionsNetworkBest For

Marketplace + Subsidies$40–200Same (subsidized)Premium onlyState/regionalLow-income yearsMarketplace (no subsidy)$250–350$190–265 (after deduction)Premium onlyState/regionalConsistent higher incomePrivate + HRA-105$150–250$114–190 (premium + out-of-pocket)Premium + all medical OOPNationwideMost small ownersSpouse’s employer planVariesVariesNone (covered under their plan)Their employer’sIf their plan is goodPrivate + HSA$150–250$114–190 + HSA savingsPremium + HSA contributionsNationwideBest tax optimization