Let’s be honest: health insurance is expensive. The average Texas small business pays over $9,000 per employee per year for single coverage and nearly $27,000 for family coverage. Those numbers can make any business owner’s head spin.
But here’s the thing: offering health benefits doesn’t have to drain your bank account. There are smart strategies Texas employers use to provide coverage while keeping costs under control.
Whether you have 5 employees or 50, this guide will show you practical ways to offer health insurance without breaking the bank.
Why Health Insurance Still Matters for Small Businesses
Before we talk about saving money, let’s address the elephant in the room: Do you even need to offer health insurance?
If you have fewer than 50 full-time employees, the answer is no legally speaking. The ACA employer mandate only applies to businesses with 50 or more full-time equivalent employees.
But here’s what the numbers tell us:
- 70% of employees say health benefits impact their decision to stay with a company
- Companies that offer health coverage see 50% lower turnover on average
- Health insurance is the #1 benefit employees look for when job hunting
In Texas’s competitive job market especially in cities like Dallas, Houston, Austin, and San Antonio offering health benefits can be the difference between landing great talent and watching them walk to a competitor.
The question isn’t whether to offer coverage. It’s how to offer it affordably. Understanding how small businesses benefit from group health insurance can help you see the bigger picture.
Strategy 1: Consider ICHRA Instead of Traditional Group Plans
ICHRA (Individual Coverage Health Reimbursement Arrangement) is one of the most powerful tools for budget-conscious Texas employers. Instead of buying a group policy, you give employees a set monthly allowance to purchase their own individual health plans.
Why ICHRA Saves Money:
- You set a fixed budget that doesn’t change
- No surprise premium hikes at renewal
- No participation requirements to meet
- Unused funds stay with you (not the employee)
Example:
Traditional group plan cost: $650/month per employee ICHRA allowance you could offer: $450/month per employee Your savings: $200/month per employee
For a 15-person company, that’s $36,000 per year in savings.
Plus, your employees might pay less too. Marketplace plans in Texas often cost less than group insurance premiums, especially for younger, healthier workers. For employees choosing their own coverage, share our guide on 10 mistakes people make when buying individual health insurance.
Strategy 2: Explore Level-Funded Plans
If you like the idea of traditional group insurance but want more control over costs, level-funded plans are worth considering.
With level-funded insurance:
- You pay a predictable monthly amount
- Stop-loss insurance protects you from catastrophic claims
- If claims come in low, you may get money back
Level-funded plans work best for businesses with 10-50 employees and a relatively healthy workforce. If your team doesn’t use much healthcare, you share in the savings unlike fully-insured plans where the carrier keeps everything. Learn more about protecting your bottom line with catastrophic stop-loss insurance.
Strategy 3: Use High-Deductible Health Plans with HSAs
High-deductible health plans (HDHPs) have lower monthly premiums than traditional plans. The trade-off is a higher deductible that employees must meet before insurance kicks in.
To offset that higher deductible, pair the HDHP with a Health Savings Account (HSA). HSAs offer triple tax benefits:
- Contributions are tax-deductible
- Money grows tax-free
- Withdrawals for qualified medical expenses are tax-free
You can contribute to employee HSAs as part of your benefits package. Many employers put $500-$1,500 per year into employee HSAs. This costs less than the premium difference between an HDHP and a traditional PPO, but employees still feel supported.
Our detailed guide on the triple tax advantage of HSA plans explains how to maximize these benefits.
Strategy 4: Look Into Association Health Plans
Association Health Plans (AHPs) let small businesses band together to purchase health coverage as a larger group. By pooling employees from multiple companies, you may get better rates than you could on your own.
In Texas, AHPs are available through:
- Industry trade associations
- Chambers of commerce
- Professional organizations
The larger risk pool can lead to lower per-person costs, especially for very small businesses (under 10 employees) that typically face the highest rates.
One caveat: AHPs aren’t subject to all ACA protections, so review the coverage carefully before signing up.
Strategy 5: Take Advantage of Tax Credits
If you’re a very small business (under 25 employees) with modest wages, you may qualify for the Small Business Health Care Tax Credit. This credit covers up to 50% of the premiums you pay toward employee coverage.
To qualify:
- Fewer than 25 full-time equivalent employees
- Average wages below $66,600 (2025)
- You pay at least 50% of employee-only premiums
- You purchase coverage through the SHOP marketplace
For eligible businesses, this credit is a game-changer. Getting half your premium costs back can make previously unaffordable coverage suddenly within reach. Visit Healthcare.gov’s tax credit information to check your eligibility.
Strategy 6: Shop Around Every Year
This sounds obvious, but many business owners renew their health plan automatically without shopping alternatives. That’s a mistake.
Health insurance rates vary significantly between carriers. What was the cheapest option last year might not be this year. New plans enter the market, and pricing strategies change.
Set a reminder to shop your coverage 60-90 days before your renewal date. Get quotes from at least 3-4 carriers and compare:
- Monthly premiums
- Deductibles and out-of-pocket maximums
- Provider networks (are your employees’ doctors included?)
- Prescription drug coverage
Working with an independent broker makes this easier. Brokers can quickly pull quotes from multiple carriers and help you compare apples to apples. Learn more about what a local health insurance broker can do for you.
Strategy 7: Adjust Cost-Sharing with Employees
You don’t have to pay 100% of employee premiums. In fact, most Texas employers share costs with workers.
The typical arrangement:
- Employer pays 70-80% of employee-only coverage
- Employee pays 20-30% of employee-only coverage
- Employees pay a larger share (or all) of dependent/family coverage
By adjusting these percentages, you can offer coverage while managing your budget. For example:
- Option A: Pay 80% of a rich PPO plan = $8,000/year per employee
- Option B: Pay 70% of an HDHP = $4,500/year per employee
Both options provide coverage, but Option B costs nearly half as much.
Be upfront with employees about cost-sharing. Most workers understand that health insurance is expensive and are willing to contribute, especially for quality coverage. Our guide on demystifying deductibles can help employees understand their options better.
Strategy 8: Consider Defined Contribution Approaches
Instead of choosing a specific health plan for everyone, you can give employees a defined contribution a set dollar amount to spend on coverage they choose.
This approach (which ICHRA formalizes) puts employees in control of their healthcare decisions while you control your budget.
Benefits:
- Fixed, predictable employer costs
- Employees can choose plans that match their needs
- No participation requirements to worry about
- Simpler administration
The defined contribution approach works especially well for diverse workforces where a single group plan can’t meet everyone’s needs.
Strategy 9: Add Ancillary Benefits Strategically
Sometimes the best way to boost your benefits package isn’t through richer medical coverage, it’s through ancillary benefits that cost much less.
Consider adding:
- Dental insurance: Often $30-50/month per employee
- Vision insurance: Usually $10-15/month per employee
- Life insurance: Basic coverage can be under $10/month per employee
- Telemedicine: $5-15/month per employee for 24/7 doctor access
These benefits are affordable but highly valued by employees. A modest medical plan plus dental, vision, and telemedicine can feel like a comprehensive package without the comprehensive price tag.
Read our guides on top dental insurance plans for families and what to look for in a vision insurance plan to explore your options.
Strategy 10: Promote Wellness and Prevention
Healthy employees cost less to insure. Investing in wellness can pay off through lower claims (especially with level-funded plans) and better renewal rates.
Low-cost wellness ideas:
- Encourage annual physicals and preventive screenings
- Offer gym membership discounts or fitness challenges
- Provide healthy snacks in the break room
- Support mental health through EAP programs
- Allow flexible schedules that reduce stress
Many insurance carriers include wellness programs at no extra cost. Take advantage of these offerings; they benefit your employees and your bottom line. Learn more about why wellness programs improve productivity and employee retention.
Real Example: How One Dallas Business Cut Costs by 30%
Here’s a real scenario (with names changed) of how a local business reduced health insurance costs:
Background: Rodriguez Electric is an electrical contractor in Dallas with 22 employees. They were paying $156,000/year for a traditional group PPO plan and facing a 12% increase at renewal.
The Problem: The renewal would push costs to $175,000—money they didn’t have in the budget.
The Solution: After working with a broker, Rodriguez Electric:
- Switched from a rich PPO to a level-funded HDHP
- Added HSA contributions of $1,000 per employee
- Enhanced ancillary benefits (dental, vision, basic life)
The Result:
- New level-funded plan: $98,000/year
- HSA contributions: $22,000/year
- Enhanced ancillary: $12,000/year
- Total: $132,000/year
That’s a savings of $43,000 compared to their renewal quote—and employees actually felt their benefits improved because of the HSA money and added dental/vision coverage.
Why Choose Us?
At Wilkerson Insurance Agency, we specialize in helping Texas small businesses find affordable health insurance solutions.
- 15+ Years of Experience: We’ve helped businesses of all sizes across Dallas, Plano, Irving, Farmers Branch, and beyond find coverage that fits their budget
- Personalized Service: We take time to understand your business, your employees, and your financial situation before recommending anything
- Deep Knowledge: Our team knows ICHRA, level-funded plans, traditional group coverage, tax credits, and all the options available to Texas employers
- Multiple Options: We’re independent, so we work with dozens of carriers to find you the best rates
- Ongoing Support: We’re here year-round to answer questions, help with claims issues, and prepare for renewals
- Free Consultations: There’s no cost to meet with us and explore your options
Frequently Asked Questions
What’s the cheapest way to offer health insurance to employees?
ICHRA is often the most affordable option because you set a fixed budget with no surprises. However, the “cheapest” option depends on your specific situation—workforce size, employee health, and how much coverage you want to provide.
Can I offer health insurance to some employees but not others?
You can set eligibility rules (like requiring 30+ hours per week), but you must apply them consistently. You can’t pick and choose individual employees to cover or exclude.
What if I can’t afford to pay any portion of employee premiums?
You can still help by setting up a payroll deduction system that lets employees buy coverage with pre-tax dollars. This doesn’t cost you anything but gives employees a tax benefit.
How do I know if my current plan is a good deal?
Shop around. Get quotes from at least 3-4 carriers and compare them to what you’re paying now. A broker can help you evaluate whether you’re getting good value.
When is the best time to shop for new health insurance?
Start shopping 60-90 days before your renewal date. This gives you time to compare options, make a decision, and communicate changes to employees.
Conclusion
Health insurance doesn’t have to break the bank. By exploring ICHRA, level-funded plans, HDHPs with HSAs, tax credits, and smart cost-sharing strategies, Texas small businesses can offer meaningful coverage while keeping costs under control.
The key is understanding your options and working with someone who can help you find the right fit.
Ready to see what’s possible for your business? Contact Wilkerson Insurance Agency today. We’ll help you find affordable health insurance that works for your budget and your team.
