Health insurance options for 20 to 100 employees in 2027
Health plans for 20 to 100 employees: fully insured, level-funded, ICHRA and PEO, the IRS tax credit and the ALE test of 50 full-time employees and equivalents.
With 20 to 100 employees, four health plan options are worth comparing.
Quick answer
If you averaged fewer than 50 full-time employees, counting equivalents, in 2026, the federal employer mandate generally does not apply to you in 2027. At 50 or more, you are generally an applicable large employer (ALE) for 2027. To avoid a potential employer shared responsibility payment, offer coverage to full-time employees and their dependents, and make the employee’s self-only coverage affordable and minimum value. A payment can arise only if a full-time employee receives a Marketplace premium tax credit.
How do the four options compare?
What fits depends on where your employees live and which networks they use, your contribution budget, underwriting, and how much administration your staff can take on.
| Option | Generally fits | Ask before you sign |
|---|---|---|
| Fully insured group coverage | Small-group or large-group market, by your size | Renewal increase, network, contribution rules |
| Level-funded plan | Groups comparing against a fully insured renewal | Maximum liability, stop-loss exclusions, reporting duties |
| Individual coverage HRA (ICHRA) | Any size, within the class rules | Class sizes, notice, affordability if an ALE |
| Plan through a PEO | Employers wanting benefits run with payroll | Plan sponsor, carrier, rates, exit terms |
Count your workforce before you choose
The federal thresholds at a glance
- 1 to 50 FTE employees, not counting owners, partners or family members, is generally the size needed to buy SHOP insurance, according to HealthCare.gov.
- An average of at least 50 full-time employees, including equivalents, in the preceding calendar year generally makes an employer an ALE.
- 30 hours a week, or 130 hours a month, on average generally makes an employee full-time under the employer shared responsibility rules.
The IRS counts equivalents for a month by adding the hours of service of employees who are not full-time, up to 120 per person, and dividing by 120. For example, 40 full-time employees plus 20 part-time employees with 60 hours each in a month make 50 (20 x 60 / 120 = 10 FTEs).
The IRS says an ALE also has information reporting duties to employees and the IRS. If you own more than one company, check the IRS aggregation rules for related employers.
What does each option look like?
Fully insured group coverage
What it is. A group plan bought from an insurance company. Under 42 U.S.C. 18024, a state’s small-group market generally covers employers with up to 50 employees, though a state may extend it to 100; above that, an employer buys large-group coverage. To buy SHOP coverage, a business generally must have 1 to 50 employees. With SHOP, HealthCare.gov says, you choose how much you pay toward premiums, and an eligible employer can start offering coverage any time of year.
When to consider it. When you want an insured plan in the market your headcount sets.
What to check. The renewal increase, the provider network and the carrier’s contribution rules.
A level-funded plan
What it is. The Maryland Insurance Administration calls it self-insurance paired with stop-loss: you typically pay a monthly amount for estimated claims, stop-loss insurance and administration, and stop-loss pays only after costs reach a certain amount. Your exposure to claims above the funded amount depends on the contract and stop-loss terms, and a surplus refund may be available under the contract.
When to consider it. When you want a second price against your fully insured renewal.
What to check. Get in writing the maximum employer liability, stop-loss exclusions, claims covered after the contract ends, surplus handling and renewal limits. Confirm who handles the plan’s self-insured reporting: the IRS says an employer sponsoring self-insured coverage has its own information reporting duties, whether or not it is an ALE.
An individual coverage HRA
What it is. You set an amount and reimburse employees for individual health insurance they choose. Treasury, Labor and HHS say any size employer may offer one, subject to the HRA rule. Employees must enroll in individual coverage or Medicare Parts A and B, or Medicare Part C, for each covered month; short-term, limited-duration insurance does not qualify.
When to consider it. To set amounts by class of employees. Terms must be the same within a class, though amounts may rise for older workers and workers with more dependents. For an ALE, an ICHRA counts as an offer of coverage; to avoid a payment, you generally must make it affordable.
What to check. The HRA must have reasonable procedures to confirm enrollment and let employees opt out at least annually. For a January 1, 2027 start, employees generally should enroll between November 1 and December 15, 2026, HealthCare.gov‘s last day for January 1 coverage; some state Exchanges may provide additional time.
Individual policies generally fall outside your plan if buying is completely voluntary, you select or endorse no carrier or coverage, you receive nothing for an employee’s choice, and you tell employees yearly the policy is not subject to ERISA.
Notice deadline
Under the HRA rule, the HRA and premium tax credit notice is due at least 90 calendar days before each plan year: for a January 1, 2027 ICHRA, by October 3, 2026, now passed. A participant not eligible at the start of the plan year, or when that notice is given, gets it by the date the HRA may first take effect for them. The same date applies in the HRA’s first plan year if the employer was first established less than 120 days before that plan year.
A plan through a PEO
What it is. A health plan offered through a PEO and run with payroll. See our article on why a PEO is suited for benefits administration.
When to consider it. When you want fewer administrative tasks for your staff.
What to check. Who can enroll, what you contribute, the plan sponsor, carrier and rates, renewal and exit terms, and which administrative tasks your staff still handle.
Before you sign a January 1, 2027 renewal
See our piece on voluntary benefit options.
Primary sources: IRS credit page; IRS mandate page; IRS mandate Q&A; IRS ALE guide; SHOP overview; enrollment dates; 42 U.S.C. 18024; HRA FAQs; Form 8941 instructions; 29 CFR 2590.702-2; Maryland advisory. Last reviewed October 10, 2026.
Questions employers ask
Do we have to offer health insurance with 40 full-time employees?
Can we offer an ICHRA to some employees and a group plan to others?
Do we qualify for the small business health care tax credit?
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