A group plan can start with one employee, in any month, with no required employer contribution.
New and very small businesses often assume they need several employees, or an open enrollment window, before they can offer group coverage. In Michigan’s small-group market a plan can start with as few as one W-2 employee, on the first of any month, as an employee-paid plan if that is what the business wants.
Fewer requirements than most owners expect.
Carriers apply their own rules, so confirm the details for your situation.
One W-2 Employee
The federal definition of a small employer starts at one employee. The employee has to be a common-law, W-2 employee. Owners and their spouses generally don’t count on their own.
Any Month
A small-group plan can begin on the first of any month once the carrier approves the group and the employee enrolls.
No Required Contribution
The employer can offer an employee-paid plan. Adding a premium-only plan lets employees pay their share of the premium before tax.
Light on paper, still real.
A group plan brings obligations even with one employee.
Waiting Period
You can set a waiting period, up to 90 days at most.
Documents and Notices
Plan documents, the summary of benefits and coverage, and ERISA obligations apply. Our first-time guide walks through the list.
Contribution Choices
Employer contributions can be added later, and may make the small business health care tax credit available if the business qualifies.
Offering benefits for the first time → Small business health care tax credit →
When a group plan isn’t the best fit.
A new business has more than one option.
Owner Coverage
Owners without employees usually look at individual coverage, and the owner’s deduction depends on entity type. Your tax adviser should confirm.
ICHRA
An employer can reimburse employees for individual coverage through an ICHRA, which can suit a very small team.
Plan for Growth
Choose a carrier, network and plan design that still work at ten employees, so you aren’t forced to switch as you hire.
ICHRA vs. group health → Michigan small group health insurance →
What new businesses ask about group health plans.
Can the owner be the one employee?
No. The employee generally has to be someone other than the owner or the owner’s spouse. Carriers apply their own rules.
Do we have to contribute?
No. An employee-paid plan is allowed. Contributions are a decision for you and can change later.
When can coverage start?
On the first of any month once the carrier approves the group and the employee enrolls.
Related guides.
Offering Benefits for the First Time
What a first plan needs.
Michigan Small Group Health Insurance
How the small-group market works.
ICHRA vs. Group Health
A reimbursement alternative.
Tell us about the business.
We’ll tell you whether a group plan, an ICHRA or something else fits, what it would cost, and what you owe once you start. No cost, and no obligation.
When you plan to hire
Who the employee would be
Whether you want to contribute
Your state and ZIP
Rough answers are fine. We build the numbers from there.
Laws and rules referenced
42 U.S.C. § 300gg-91 — Definitions for group health coverage, including small employer.
45 CFR 147.116 — Prohibition on waiting periods exceeding 90 days.
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