# How do I get free health insurance for my business?

Source: https://www.getprescience.com/guides/how-to-get-free-health-insurance-for-my-business
Author: Aditya Jain, MD, Cofounder and COO, Prescience
Published: 2026-10-19
Updated: 2026-10-19

A business cannot make healthcare costless, but it can pay employees’ premiums and reduce medical expenses through its contribution policy. Eligible small employers may also claim a health-insurance tax credit. I would separate what the employee pays from what the company pays, then compare coverage and total cost.

- **Employee premium possible:** $0
- **Deductible your team sees:** Effective $0 with Prescience
- **Small business tax credit:** Up to 50% of premiums
- **Prescience admin fees:** $0

## Why "free" usually isn't

An average single employer plan cost $9,325 a year in 2025 and an average family plan $26,993, according to KFF. Those dollars come from somewhere: the employer, the employee's paycheck, a tax credit funded by taxpayers, or the employee at the point of care through a deductible. When something is advertised as free health insurance for a business, one of these is true:

- **The cost moved, not vanished.** A $0 premium plan with a $7,000 deductible still leaves potential medical bills; zero premium is not zero cost.
- **It may be a limited promotion.** Check its expiration and renewal terms.
- **It isn't insurance.** Discount cards and health-sharing programs can refuse to pay and don't follow ACA rules.
- **It's public coverage.** Medicaid and marketplace subsidies are real and valuable, but they belong to the employee, not the business, and an affordable minimum-value employer offer can affect Marketplace credits; Medicaid uses different eligibility rules.

So the real question has two parts: how do I make coverage feel free to my team, and how do I make it cost my business as little as possible? The tools are different.

## Make it free for employees

What feels free to an employee is two things: nothing comes out of their paycheck, and they don't hit a deductible when they need care. Both are design choices the employer makes.

- **Pay employee premiums.** The company can choose to cover the employee-only premium in full and set a separate dependent contribution. Budget every tier and possible enrollment changes.
- **Fund the deductible.** Employer HSA contributions can cover the deductible so employees don't feel it. The 2026 HSA limits are $4,400 self-only and $8,750 family.
- **Show copays up front** and explain exclusions, authorization rules and any services billed separately.
- **Use what's already free.** Non-grandfathered plans generally must cover applicable recommended preventive services with no deductible, copay or coinsurance in network. See [preventive care covered free](https://www.getprescience.com/guides/preventive-care-covered-free).

**What "free to employees" costs an 8-person team (illustrative)**

Assumes 8 employees on single coverage at the KFF 2025 small-firm average premium ($9,211 a year, about $768 a month) as an assumed illustrative price for an HSA-eligible plan, not a surveyed HDHP price, with the employer paying the full premium and putting $1,500 a year into each HSA.

- Premiums: 8 × $768 × 12: $73,728/year
- Employer HSA contributions: 8 × $1,500: $12,000/year
- Total employer cost: $85,728/year
- Per employee per month: About $893
- Employee paycheck deduction: $0

Employees have no premium payroll deduction and receive $1,500 for eligible medical expenses. Medical cost sharing may remain; the HSA deposit does not erase the plan deductible. The business still pays about $86,000 a year, which is why the next section matters.

## The Small Business Health Care Tax Credit, with 2026 numbers

This is the closest thing to government-paid premiums for a business. It covers up to 50% of the premiums you pay (35% for tax-exempt employers) for two consecutive tax years. To qualify you need all four:

1. **Fewer than 25 full-time equivalent employees.** An FTE is 2,080 hours a year, so two half-time workers are one FTE. Specified owners and family members are excluded under the IRS rules, including sole proprietors, partners, more-than-2% S corporation shareholders and more-than-5% other owners.
2. **Average annual wages under $68,200 for 2026.** The wage reduction begins above $34,100. The full credit also requires no more than 10 FTEs and satisfaction of the other limits.
3. **You pay at least 50% of employee-only premiums,** at a uniform percentage for everyone.
4. **The plan is bought through a SHOP marketplace,** usually with a broker's help, or you meet a limited IRS exception.

The credit also phases down between 10 and 25 FTEs, and the IRS caps the premiums that count at the average small group premium for the applicable rating area under the IRS calculation. You claim it on Form 8941, and your premium deduction drops by the amount of the credit.

**6-person team, $40,000 average wages (illustrative)**

Illustrative for a taxable employer: 6 qualifying FTEs, $40,000 average wages, no excluded owner premiums, and 75% of an assumed $9,211 annual single premium paid through SHOP. Assume the premium is below the applicable IRS average-premium cap, all other conditions are met and the credit is usable. Tax year 2026.

- Employer premiums: 6 × $9,211 × 75%: $41,450
- Maximum credit (50%): $20,725
- FTE reduction (10 or fewer FTEs): None
- Wage reduction: ($40,000 − $34,100) ÷ $34,100: About 17.302%, or $3,586
- Credit: About $17,139

The estimated credit covers about 41% of these employer premiums before the required reduction in the premium deduction. Actual Form 8941 rounding and tax circumstances control. A qualifying wage average of $150,000 exceeds the 2026 threshold and produces no credit.

## QSEHRA and ICHRA: tax-free money instead of a group plan

A properly established QSEHRA or ICHRA can provide tax-favored reimbursements under its rules. Eligibility, coverage substantiation and owner status matter. An unrestricted stipend or an informal premium payment is not automatically a compliant tax-free arrangement.

**The two main health reimbursement arrangements in 2026**

|  | QSEHRA | ICHRA |
| --- | --- | --- |
| Employer size | Eligible employer that is not an ACA applicable large employer | Any size |
| 2026 maximum | $6,450 single, $13,100 family per year | No cap |
| Can you also offer a group plan? | No | Yes, to a different class of employees |
| Effect on marketplace subsidies | Affordable QSEHRA blocks credits; otherwise permitted benefit generally reduces the credit | An affordable ICHRA ends the credit; an unaffordable one can be declined |
| Notice to employees | Generally 90 days ahead; newly eligible timing differs | Generally 90 days ahead; newly eligible and new-employer timing differs |

The practical test is whether the allowance buys suitable individual coverage locally. Premiums may vary by age and family enrollment under applicable state rules. A generous benefit in one county may leave a gap elsewhere. Compare actual plans and the subsidy interaction before choosing a QSEHRA or ICHRA.

## Medicaid and marketplace subsidies for your employees

For some employees, the most generous coverage available is public, and it really is close to free. A business with fewer than 50 full-time equivalents has no federal requirement to offer coverage, so this is a legal option. It belongs to the employee, though, and what you offer changes what they can get.

**What lower-income employees may qualify for in 2026**

| Program | Who qualifies | How an employer offer affects it |
| --- | --- | --- |
| Medicaid (adults) | Expansion-state adults generally qualify up to an effective 138% of poverty, subject to age, residency, immigration and state rules | Employees can enroll even if you offer a plan |
| CHIP (children) | Children in families above Medicaid limits, with income limits set by each state | Check current state eligibility and other-coverage rules; do not assume a waiting period |
| Marketplace premium tax credit | Generally 100%–400% of poverty plus other eligibility tests; 2026 Marketplace coverage uses 2025 guidelines | Affordable minimum-value offers can block credits; employee and family tests differ |

The enhanced federal premium tax credits applied through 2025. For 2026, evaluate eligibility under the current IRS rules and report household changes promptly. Medicaid and CHIP applications require a separate state determination; employees should not assume a Marketplace result settles eligibility for those programs.

> **When offering nothing can help employees:** A group offer can affect Marketplace credits if it is affordable and provides minimum value. Before choosing no offer, compare actual household eligibility and your legal duties. A QSEHRA also affects credits. Unrestricted taxable pay may help with expenses, but it is not insurance and does not guarantee eligibility for public coverage.

## Lower the cost for the business

- **Small Business Health Care Tax Credit:** up to 50% of premiums for two years if you qualify (above).
- **Tax deductions:** employer contributions are deductible, and employees can pay their share pre-tax under a Section 125 plan, which can also save applicable payroll taxes for eligible employees; 7.65% FICA applies below the Social Security wage base, not universally.
- **Compare service fees:** use the actual PEO or platform quote and include the value and replacement cost of HR and payroll services. Prescience charges no admin fees for its health-plan offering.
- **Compare against fully insured pricing:** in a fully insured plan, the carrier keeps what it doesn't spend on claims (the federal small-group medical loss ratio standard generally requires 80% for claims and quality improvement, using the statutory calculation and rebates). Prescience quotes are usually 10–20% below comparable fully insured coverage.
- **Compare two-year cost, not first-year price.** See [startup health insurance deals](https://www.getprescience.com/guides/startup-health-insurance-deals) for a worked example.

## Which route gets closest to free for your business

- **Choose a SHOP plan and the tax credit if** you have fewer than 25 FTEs, average wages well under $68,200 and can pay at least half of employee-only premiums. Eligibility and actual usable credit must be calculated before budgeting savings.
- **Choose a QSEHRA if** you have fewer than 50 FTEs, a tight budget and employees who are young or qualify for subsidies, and you can live with the 2026 caps of $6,450 single and $13,100 family.
- **Choose ICHRA if** your team is spread across states with healthy individual markets and you want a fixed allowance with no cap.
- **Choose a group plan with employer-paid premiums if** you're hiring salaried professionals, have parents on the team or want one network and one set of benefits for everyone.
- **Choose nothing (for now) only if** your team is tiny, mostly qualifies for Medicaid or large subsidies, and you can explain the trade-off to them honestly.

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** If the ICHRA route fits, Choice keeps it simple: you set the allowance, there's no cap like QSEHRA's, and administration is $20 per enrolled employee per month.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

## What not to do

- **Don't rely on discount cards or health-sharing programs** as a replacement for insurance. They aren't insurance, and your team won't have the same protection.
- **Don't ignore renewals.** A cheap first year that turns into a 40% renewal isn't free.
- **Don't drop coverage to save money** if you're hiring. Candidates will notice.
- **Do not reimburse premiums informally.** Employer payment arrangements can violate ACA market reforms unless a compliant exception or arrangement applies, such as a properly established ICHRA or QSEHRA. Section 4980D can impose $100 per affected person per day, subject to statutory exceptions and correction rules. Use the right documents and administration rather than assuming any payment is tax-free.

## How Prescience gets close to free for employees

At Prescience, we design and run your company's health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:

- **An effective $0 deductible,** so the plan helps from the first visit.
- **Simple copays** shown before a visit, capped by a low out-of-pocket maximum.
- **A broad national PPO network,** plus providers we contract with directly.
- **24/7 physician-led care navigation:** a care team that finds the right provider, books appointments and explains costs up front.

What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** Pay the employee premium and the plan already starts with an effective $0 deductible, so "free to employees" doesn't hide a deductible.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

## Make the employee promise precise

I would avoid calling the entire plan free. Tell employees exactly which premium tier the company pays, how dependents are treated and what they may owe for care. If the company contributes to an HSA, state the amount and deposit schedule. A monthly deposit is not the same as a full balance available for a January bill, and employer plus employee deposits share the annual contribution limit.

Check the high-use year by adding annual employee premiums to the applicable in-network out-of-pocket maximum. Do not add the deductible a second time. Separately identify noncovered services and out-of-network exposure. Review the same calculation for a single employee and a family. That is more useful than a headline promising free coverage while leaving the employee to discover which costs remain.

## Frequently asked questions

**Can a small business get free health insurance?**

An employer can cover the full premium, but copays, coinsurance and uncovered expenses may remain. Eligible tax credits and deductions can reduce the business cost; they do not make care universally free.

**Is there a government program that pays for small business health insurance?**

The Small Business Health Care Tax Credit covers up to 50% of premiums for two years for qualifying employers with fewer than 25 full-time equivalents who buy through SHOP. For 2026, average wages must be under $68,200, with the full wage-based credit at $34,100 or less, before any FTE phase-down or other limit.

**Are employer health insurance costs tax-deductible?**

Yes. Employer contributions to employee health coverage are generally deductible business expenses and tax-free to employees.

**How can employees pay nothing for health insurance?**

An employer can pay the premium in full, but employees may still owe copays, coinsurance or uncovered expenses. Employer HSA deposits can help eligible employees with costs. Prescience offers an effective $0 deductible; premium contributions are a separate employer decision.

**Do small businesses have to offer health insurance?**

Federal ACA employer shared-responsibility rules generally apply based on an average of at least 50 full-time employees, including equivalents, in the prior calendar year, aggregating related employers. Exceptions and penalty conditions matter. State obligations can differ.

**Can my employees get Medicaid if I offer health insurance?**

An employer offer does not by itself disqualify someone from Medicaid. Eligibility also depends on the state, income, household, age and immigration or residency rules. Expansion states generally cover otherwise eligible adults under 65 up to an effective 138% of the poverty level.

**What are the 2026 QSEHRA limits?**

$6,450 a year for self-only coverage and $13,100 for family coverage.

**Will offering health insurance cost my employees their subsidies?**

An affordable minimum-value employer offer can block employee premium tax credits. For a traditional group plan, family members have a separate affordability test based on the relevant family premium. For 2026 plan years, the percentage is 9.96%; household and other eligibility rules also apply.

**Is health-sharing a free alternative to insurance?**

No. Health-sharing ministries aren't insurance, aren't required to pay claims and don't follow ACA rules on pre-existing conditions or essential benefits.

## Sources

- [IRS, small business health care tax credit](https://www.irs.gov/affordable-care-act/employers/small-business-health-care-tax-credit-and-the-shop-marketplace)
- [IRS Revenue Procedure 2025-32, 2026 tax adjustments](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [IRS Publication 15-B (2026), fringe benefits and owner exceptions](https://www.irs.gov/publications/p15b)
- [IRS Revenue Procedure 2025-19, 2026 HSA and HDHP limits](https://www.irs.gov/pub/irs-drop/rp-25-19.pdf)
- [IRS Publication 969, HSA eligibility, contributions and distributions](https://www.irs.gov/publications/p969)
- [HealthCare.gov, individual coverage HRAs](https://www.healthcare.gov/small-businesses/learn-more/individual-coverage-hra/)
- [HealthCare.gov, Medicaid expansion and eligibility](https://www.healthcare.gov/medicaid-chip/medicaid-expansion-and-you/)
- [HealthCare.gov, federal poverty levels by coverage year](https://www.healthcare.gov/glossary/federal-poverty-level-fpl/)
- [IRS Revenue Procedure 2025-25, 2026 affordability](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf)
- [HealthCare.gov, preventive health services](https://www.healthcare.gov/coverage/preventive-care-benefits/)
- [CMS, medical loss ratio rules](https://www.cms.gov/marketplace/private-health-insurance/medical-loss-ratio)
- [IRS Notice 2015-17, employer payment arrangements](https://www.irs.gov/pub/irs-drop/n-15-17.pdf)
- [KFF, 2025 Employer Health Benefits Survey (original survey and methodology)](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/)
- [IRS, employer shared responsibility provisions](https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions)