A business with 25 employees is in an important part of the health insurance market. It is large enough to build a meaningful benefits package but generally still considered a small employer for federal health coverage purposes.
That creates flexibility. The employer may be able to offer a traditional small-group plan, consider level funding, reimburse employees for individual coverage or decide not to sponsor health coverage. Each approach has different consequences for recruiting, employee experience, cost predictability and administration.
Here are the primary health insurance options a 25-employee business should evaluate.
Usually, no. The Affordable Care Act’s employer shared responsibility rules generally apply when an employer averages at least 50 full-time employees, including full-time-equivalent employees, during the prior calendar year.
Do not rely only on headcount. Part-time hours count toward the full-time-equivalent calculation, and businesses under common ownership may have to be combined. A company with 25 employees can therefore have a different result if it is part of a controlled or affiliated group.
Even when coverage is not legally required, many 25-person employers offer it because health insurance is central to recruiting and retaining employees.
The employer pays a fixed monthly premium to an insurance carrier, and the carrier assumes the risk of covered claims. Premiums are generally based on factors permitted in the small-group market, including employee and dependent ages, geographic rating area, family size and tobacco use where permitted.
This is often the simplest arrangement to explain and administer. Employers can commonly offer one plan or a small menu of plans and set a defined contribution toward coverage. The main drawback is that the employer may receive limited claims information and can still face meaningful renewal increases.
Best fit: Employers prioritizing predictable monthly billing, straightforward administration and broad employee familiarity.
A level-funded plan combines elements of fully insured and self-funded coverage. The employer pays a fixed monthly amount that typically includes estimated claims funding, administrative expenses and stop-loss protection. Depending on the contract, favorable claims may create the possibility of a refund or surplus credit, while stop-loss coverage limits exposure to larger-than-expected claims.
Level funding can be attractive to healthy groups and may provide more useful claims reporting. It is not simply a cheaper version of fully insured coverage. Medical underwriting, contract terms, terminal liability, stop-loss provisions and state availability matter. The employer should understand exactly what happens when claims run better—or worse—than expected.
Best fit: Employers comfortable evaluating claims risk and contract detail in exchange for potential savings and better data.
With an ICHRA, the employer provides a defined, tax-advantaged reimbursement that eligible employees use toward qualifying individual health coverage and, depending on the plan design, other medical expenses. The employer controls its contribution while employees choose individual policies available where they live.
An ICHRA can work well for a distributed workforce or an employer seeking a defined budget. The tradeoff is a more individual employee experience. Networks, carriers and premiums can vary by employee location and age, and employees need strong enrollment support. The offer can also affect an employee’s eligibility for Marketplace premium tax credits. For 2026, ICHRA affordability uses a 9.96% standard.
Best fit: Employers seeking defined contributions, geographic flexibility and individual plan choice—and willing to provide employees with hands-on decision support.
A business below the ACA employer-mandate threshold can generally decide not to offer health insurance. Employees may purchase individual coverage and, depending on household circumstances, may qualify for Marketplace assistance.
This option minimizes employer benefit expense but can create a serious recruiting and retention disadvantage. Giving employees a taxable raise or informal health insurance allowance is not the same as establishing a compliant HRA, and reimbursing individual premiums outside an approved arrangement can create compliance problems.
Best fit: Early-stage or cost-constrained employers that have deliberately evaluated the workforce impact and compliance limitations.
There is no single contribution percentage that works for every business. The employer should start with a sustainable annual budget and then test how the contribution affects employees at different pay levels and coverage tiers.
A practical strategy is to anchor the employer contribution to a base plan and allow employees to buy up to richer plans. This gives the employer budget control while preserving employee choice. Modeling should include employee-only, employee-plus-spouse, employee-plus-child and family coverage because a contribution that looks strong for one tier may be weak for another.
First, establish the employer’s maximum annual budget. Second, gather an accurate census and understand employee locations and current coverage. Third, compare the full set of viable funding arrangements rather than assuming traditional small-group insurance is the only choice. Fourth, model employer and employee costs under at least two contribution strategies. Finally, select the arrangement employees can understand and the employer can administer consistently.
For many 25-person businesses, the strongest result is not one perfect plan. It is a defined contribution paired with two or three carefully selected options, clear employee education and dependable enrollment support.
The BRIC Agency helps small and growing employers evaluate traditional group insurance, level funding and defined-contribution strategies. We also support implementation, enrollment, employee communication, compliance and claims issues throughout the year.
CALL TO ACTION: If your business has approximately 25 employees, we can build a side-by-side analysis showing employer cost, employee deductions, plan differences and the tradeoffs of each funding approach.
Often, yes. Carrier and participation rules vary, but many employers offer a base plan plus one or two alternatives. The contribution strategy should make the differences understandable and financially sustainable.
Yes, an employer can generally choose to pay the full employee-only premium, subject to carrier and plan rules. The employer should decide separately how much, if anything, it will contribute toward dependent coverage.
Generally, yes. Employees may waive coverage, often because they are covered through a spouse, parent, Medicare or another program. Waivers and other coverage documentation can affect carrier participation calculations.
No. Results depend on underwriting, claims, stop-loss terms, network discounts and contract provisions. It can create savings for some employers, but the comparison must account for risk and not just the initial monthly rate.
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