Health Insurance for a Husband-and-Wife Business With No Other Employees

You run the shop together, you split the books together, and you would like to buy health insurance through the business together. Here is the catch that surprises most couples, and the options that actually work.

Why you cannot buy a group plan (yet)

Small group health insurance is built for employers covering employees. Under federal rules, a business with no employees other than the owners and their spouses is not eligible for SHOP small group coverage, and private carriers apply the same test. HealthCare.gov puts it plainly: you generally need at least one employee other than the owners or their spouses.

That rule applies whether you are a sole proprietor, an LLC, a partnership or an S corporation. Putting your spouse on payroll does not change it, because the spouse still does not count as the qualifying employee.

What husband-and-wife owners can do instead

For 2027 coverage, a couple loses all Marketplace subsidy above $86,560 of household income, and a family of four above $132,000. Your household income starts from the business's net profit, not its sales, so a busy shop with real expenses can still qualify. Check your number with the subsidy calculator.

Make the premiums a business write-off

Even without a group plan, the tax break is still there. Self-employed owners can generally deduct health insurance premiums for themselves, a spouse and dependents as an adjustment to income, using IRS Form 7206. Two limits apply: the deduction cannot exceed the business's net profit, and you cannot take it for any month you were eligible for an employer-subsidized plan, including through a spouse's outside job.

Some couples set things up so one spouse is a genuine W-2 employee of a sole proprietorship and the business reimburses that employee's family medical costs through a special arrangement. It can work, but the rules are strict and depend on your entity type. Do not set it up without your CPA.

When you hire your first employee

Your first W-2 hire who is not your spouse changes the picture. In Florida, a small group can start with a single eligible employee, as long as the plan's participation and contribution rules are met. At that point you can cover yourself, your spouse and your employee on one group plan. Before you jump:

• Most carriers require a minimum share of eligible employees to enroll. See minimum participation rules.
• Most carriers require the business to pay at least half of the employee's premium.
• Compare the group price against keeping your family plan and offering the employee an ICHRA instead.

Our step-by-step setup guide walks through the paperwork.

Why many couples end up in the private market

Couples who own a profitable shop often land just over the subsidy line. If you are both healthy, a private family plan can cost less than a full-price Marketplace plan, can start outside open enrollment, and often comes with a broader PPO network. The trade-off: you answer health questions and can be declined or have conditions excluded. Read the benefits and trade-offs of private health insurance before you choose.

Frequently Asked Questions

Can a husband and wife get group health insurance for their business?

Generally no, if they are the only people working in the business. Small group plans require at least one employee who is not an owner or an owner's spouse. Once you hire an eligible W-2 employee, you can usually start a group plan.

Does putting my spouse on payroll qualify us for a group plan?

No. A spouse on payroll still does not count as the qualifying employee for small group eligibility.

Can we deduct our health insurance if we own the business together?

Usually yes. Self-employed owners can generally deduct premiums for themselves, a spouse and dependents using IRS Form 7206, up to the business's net profit, for months when neither of you was eligible for an employer-subsidized plan.

What is the best health insurance for a couple that owns a business?

It depends on income and health. At or below the subsidy cliff, a Marketplace family plan usually wins. Above it, healthy couples often pay less with a private plan. Couples with health conditions are usually safest on an ACA plan.

This article is general information, not tax or legal advice. Plan availability, rules and prices vary by state and carrier, and your policy documents govern. Talk to your tax professional about deductions.