As a small business owner in Indiana, offering health insurance isn’t just about checking a box—it’s about investing in your people, standing out from competitors, and creating a thriving workplace culture. But with rising costs, evolving regulations, and countless plan options, figuring out the best path forward can feel overwhelming.
This guide breaks everything down—so you can make informed, confident decisions about your team’s healthcare. Whether you're weighing your options for the first time or re-evaluating your current plan, this guide to small business health insurance in Indiana is for you.
Do you have to offer health insurance?
Health insurance is one of the most valuable benefits you can offer. It helps you attract top talent, increase employee loyalty, and reduce turnover. Even if you're not legally required to provide coverage, offering benefits often pays off in lower recruitment costs and a healthier, more motivated team.
However, if you have fewer than 50 full-time employees, you are not legally required to offer health insurance under the Affordable Care Act (ACA). But if you have 50 or more full-time employees, you're considered an Applicable Large Employer (ALE) and must provide affordable coverage—or face potential penalties.
Still, many Indiana small businesses offer insurance voluntarily, not just because it’s the right thing to do, but because it’s a smart business move. And in some cases, offering coverage may qualify you for tax incentives that help offset the cost.
What are your small business health plan options?
There are a number of health plan options for small businesses. Because of this, it’s important to do your research and find the plan that fits your business’s specific needs and limitations.
Here’s a quick look at the most common health insurance options available to small businesses in Indiana:
Small Group Health Insurance
Designed for companies with fewer than 50 employees (though in some cases up to 100), these traditional plans let you offer coverage to your employees and their families. You pay a portion of the premium, and employees cover the rest.
Key highlights include:
✅ Familiar structure
✅ Group buying power
✅ Regulated for ACA compliance
ICHRA (Individual Coverage Health Reimbursement Arrangement)
This flexible option allows you to reimburse employees—tax-free—for health insurance they buy on their own.
Key highlights include:
✅ Total budget control
✅ Employees pick their own plans
✅ No minimum participation requirements
QSEHRA (Qualified Small Employer Health Reimbursement Arrangement)
QSEHRA is similar to ICHRA but with yearly reimbursement limits set by the IRS. This plan allows employers to reimburse employees for medical expenses, including individual health insurance premiums, tax-free. QSEHRA is simple to administer and ideal for very small businesses.
Key highlights include:
✅ IRS-regulated tax advantages
✅ Streamlined process for teams under 50 employees
Self-Funded Health Insurance
With self-funded plans, you pay claims as they happen rather than paying premiums to a traditional insurance company. With all the hidden and inflated costs of other plans (which we’ll get to shortly), many Indiana small businesses are shifting to this more transparent healthcare strategy.
Key highlights and considerations include:
✅ Potential for cost savings
✅ Vendor accountability
✅ Cost control
✅ Customizable and flexible plan design
⚠️ Requires careful cash flow planning and stop-loss insurance
Health Stipends
A simple way to help employees with medical costs is by providing a flat, taxable monthly amount to spend on healthcare expenses of their choosing.
Key highlights and considerations include:
✅ Easiest to set up
⚠️ No tax advantages or ACA compliance
⚠️ May appear less appealing to employees
AHPs (Association Health Plans)
These plans let small businesses band together to buy insurance as a group—often through an industry or trade group—as a way to find more favorable insurance rates and broader coverage.
Key highlights and considerations include:
✅ Broader plan options
✅ May lower premiums through collective bargaining
⚠️ Can lack ACA protections—review carefully
How much does health insurance in Indiana cost?
The cost of providing health insurance to your team isn’t one-size-fits-all. It varies based on several key factors, including the size of your company, the demographics of your employees, your location, and the type of coverage you choose.
According to the Kaiser Family Foundation’s 2024 Employer Health Benefits Survey, here’s what small businesses paid on average:
Single Coverage: Approximately $746 per month (or $8,951 annually)
Family Coverage: Approximately $2,131 per month (or $25,572 annually)
However, if you're doing business in Indiana, there's another layer: healthcare costs here are consistently higher than in surrounding states. This is largely due to:
- Hospital Consolidation: A handful of major healthcare systems dominate the market, reducing competition.
- Limited Price Transparency: It’s difficult for employers to shop around for better rates when pricing is unclear.
- A Hidden “Healthcare Tax”: Indiana hospitals often charge employers more to compensate for underpayments from Medicare, Medicaid, and uninsured patients.
Translation? Indiana businesses often pay more—for less.
That’s why it’s essential to go beyond just comparing premiums. To get the most value from your investment, you need to understand where your money is going and how you can control rising costs. A knowledgeable, Indiana-based benefits advisor can help you identify cost drivers, evaluate alternative funding strategies, and design a plan that actually works for your business and your employees.
What should you consider when choosing a plan?
To make the most of your investment—and support your team effectively—there are several important factors to consider before choosing a plan:
Your Budget
As we’ve just covered, healthcare can be expensive—but it’s also an investment. Start by determining how much your business can realistically afford to contribute each month toward premiums.
And don’t forget to factor in potential long-term savings. Offering health insurance may reduce turnover, cut down on hiring costs, and help you retain experienced team members—all of which save money over time.
Employee Needs
No two teams are exactly alike. Offering benefits that your employees actually value will go much further—and save you more money—than offering a plan they barely use.
Ask yourself:
- What’s the age range of your employees?
- Do they tend to be single or have families?
- Is mental health support a high priority?
- Would they prefer low premiums with higher deductibles—or the opposite?
The more you know about your team's healthcare priorities, the easier it is to choose a plan that supports their well-being and boosts participation. Not sure what exactly your employees need? Don’t be afraid to ask! Send out regular surveys or hold open discussions to get a better understanding of your employees.
Provider Networks
A plan’s network can make or break its usefulness. Narrow networks may lower costs, but they can also create frustration if employees can’t see their preferred doctors or access local hospitals.
In Indiana, some healthcare systems dominate specific regions, which can limit choice. This is one of the reasons local knowledge matters. Work with a benefits advisor to help you compare real network access and not just what's shown on paper.
Compliance and Legal Considerations
Again, health insurance is regulated by both state and federal laws. Staying compliant is essential—especially as rules around ICHRAs, mental health parity, and the ACA continue to evolve.
Here’s what you need to keep in mind:
- Are you an Applicable Large Employer (ALE) required to offer insurance?
- Do your benefits meet ACA minimum essential coverage standards?
- Are you tracking employee hours correctly for eligibility?
- Are your health plan documents up to date and legally sound?
If that sounds like a lot, don’t worry—this is exactly where working with an employee benefits firm like Paradigm becomes invaluable. Our team keeps up with changing regulations so you don’t have to.
Health insurance is one of the biggest—and most important—investments you can make as a small business owner. And with the rising cost of care in Indiana, it’s more important than ever to have someone in your corner.
Paradigm has been helping Indiana businesses design smarter, more affordable employee benefits packages for years. From traditional group plans to creative self-funding strategies, we’ll help you find the right fit for your business, your people, and your budget.
Please let us know if you have any questions. We understand that local companies have unique needs that most national firms don’t consider or struggle to identify. This leaves your people with a less effective, one-size-fits-all benefits plan. However, our ability to cater to the needs of our clients comes from decades of client partnerships. This perspective allows us to fully address unique needs and generate creative benefits plans.
You shouldn’t have to worry about just being a number, offering a generic plan, or getting the unique support you need. Call us today.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.