Federal law defines the small group market as one that sells health plans to business with between 1-100 employees. However, until 2016, states have the option to include businesses with fewer than 50 employees in the small group market. And while 12 states allow self-employed individuals with no other employees to be considered a small group-of-one and therefore able to buy insurance in the small group market, most states do not. Typically, self-employed individuals must buy coverage in the individual market.
Generally, the small group market is subject to greater regulation than other insurance markets. In all states there are rules prohibiting insurers from turning small groups down because of the health status of someone in the group. In most states, there are also rules about which benefits must be covered and about premiums that can be charged for small group insurance policies.
The smaller the business, the less likely it is to offer health benefits to its workers. Among very small firms (with fewer than 10 workers) only 59 percent offer health benefits. By contrast, 76 percent of companies with 10-24 workers, and 92 percent of companies with 25-50 workers offer health benefits. The leading reason that small businesses don't offer health insurance is inability to afford the premiums. In addition, employees of small companies often have health insurance through another source, like a spouse who works for a larger employer. Small employers can also be discouraged by the administrative hassle of shopping for and purchasing coverage.