Plans for teams of 2 to 50 anywhere in Texas — Houston, DFW, Austin, San Antonio, El Paso and the Valley. We compare every carrier writing in your rating area, run the participation math, and it costs you nothing. Carriers pay our commission either way.
Texas Insurance Code section 1501.002(14) defines a small employer as one that “employed an average of at least two employees but not more than 50 employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year.” Two separate tests, both of which have to be met. The federal default at 45 CFR 155.20 is one; Texas chose two and kept it.
The practical effect is that a genuine one-person business in Texas cannot buy small group coverage, however it is structured on paper. Owners find this out after they have already picked a plan.
Two things soften it, and both are Texas-only.
Federal guidance does not treat a husband-and-wife business as a group health plan unless there is a common-law employee who is neither spouse. TDI has told carriers they may not refuse a Texas group on that basis: under Texas law a group of two eligible employees is a small group regardless of marital status, and coverage must be issued. If you and your spouse are both on payroll, you are a group in Texas.
Texas statute creates an “eligible single-employee business” category at section 1501.051(3-a) — owned and operated by a sole proprietor, averaging fewer than two employees. Section 1501.0581 lets a health group cooperative admit those businesses, and when it does, the small-employer guaranteed-issue, rating and mandated-benefit rules apply to them. It is a narrow door, but it exists, and it is the only one. If you are a true group of one, the realistic comparison is that route against individual coverage or an ICHRA from a related entity.
Sources: Tex. Ins. Code ch. 1501 · TDI health carrier FAQ
Texas prices small group by the employer’s geographic rating area, and it has 27 of them — more granular than almost any state. Before 2023 there were 26, with a single catch-all area covering all 177 rural counties. Texas dissolved that area and folded those counties into adjacent urban ones, so a rural Texas employer is now pooled with a nearby metro rather than with the rest of rural Texas.
| Metro | Rating area | What that means for you |
|---|---|---|
| Houston | Area 10 — Harris, Galveston | One area covers the core; surrounding counties rate separately |
| Dallas | Area 8 — Collin, Dallas, Ellis, Hunt, Kaufman, Navarro, Rockwall | DFW is two rating areas. A team split across Dallas and Tarrant counties is not one price |
| Fort Worth | Area 25 — Tarrant, Denton, Parker, Johnson, Hood and others | |
| Austin | Area 3 — Travis, Williamson, Hays, Bastrop and others | Wide area; suburban growth counties are included |
| San Antonio | Area 18 — Bexar, Comal, Guadalupe, Kendall and 17 more | Largest area by county count, reaching to the border |
| El Paso | Area 9 — El Paso, Hudspeth, Culberson, Brewster and others | Far West Texas rates as its own pool |
| Rio Grande Valley | Area 15 (Hidalgo, Starr, Brooks) and Area 5 (Cameron, Willacy, Kenedy) | McAllen and Brownsville are separate rating areas |
If you have people in more than one of these, model it before you sign. Two offices ninety minutes apart can carry meaningfully different per-employee costs for identical coverage, and the quote you were given for the headquarters address is not the quote for the whole company.
County assignments: CMS Texas geographic rating areas
Texas Insurance Code section 1501.154 makes coverage available to a small employer when at least 75 percent of eligible employees elect to participate — higher than the 70 percent most states use, and Texas is named explicitly on healthcare.gov as one of the few states above the standard. Carriers may offer a lower threshold, but they have to offer the same lower threshold to every Texas small employer, so in practice 75 percent is what you plan against.
Owners, an owner’s spouse, COBRA enrollees and retirees come out of the calculation entirely. So does any employee who declines because they already have qualifying coverage — a spouse’s plan, a second job, Medicare, Medicaid, TRICARE or VA. Those are waivers, not refusals. A ten-person company where four are on a spouse’s plan is measured against six, not ten.
And if you still cannot get there: apply between November 15 and December 15. Federal market rules at 45 CFR 147.104(b)(1) let carriers confine a non-compliant group to that annual window, and TDI has told carriers they may not refuse the group outright — guaranteed issue still applies. Inside those thirty days the participation and contribution requirements do not.
Texas imposes no minimum. Section 1501.153 says outright that the chapter does not require a small employer to contribute, though it lets carriers set their own requirement in line with their usual practice — which in Texas is generally at least half of the employee-only premium. Separately, paying at least 50 percent of employee-only coverage is a condition of the federal Small Business Health Care Tax Credit, so the two numbers get conflated. They are not the same rule.
TDI has told carriers that in Texas tobacco use has always been treated as a health status related factor under section 1501.002(7), and section 1501.206 prohibits adjusting an individual small group enrollee’s premium on health status. The department states it will not change that interpretation. A carrier may reflect a tobacco load in the rate charged to the employer, but “the surcharge must be applied uniformly to the rates charged for all members of the small employer.”
If a Texas quote shows a per-person smoker surcharge on a named employee, that is worth a question before you sign.
The wider point is that a small group of 2 to 50 in Texas can be rated on five things and nothing else: whether the coverage is individual or family, the rating area, employee age within a 3 to 1 band, tobacco use within a 1.5 to 1 band, and the plan you pick. Industry, injury rate and last year’s claims are not on the list. Owners in construction, oilfield services, trucking and manufacturing routinely assume group health is priced the way workers’ comp is — class code, experience mod, loss history — and never get a quote. It is not, and the assumption is expensive.
Texas has the highest uninsured rate in the country. In 2024, 16.8 percent of Texans had no health coverage against a national figure of 8.2 percent, and 19.2 percent of Texans under 65 were uninsured. Nationally, only about half of employees at firms with fewer than 50 people work somewhere that offers health insurance at all, against 97 percent at firms of 50 or more.
Put those together and a Texas small employer that offers coverage is competing for staff against a field where most of the comparable jobs do not. That is the argument for offering, and it is stronger here than in any other state.
Sources: KFF State Health Facts, 2024 ACS · AHRQ MEPS-IC Research Findings #54. National figures where noted; there is no reliable Texas-only small-group premium average, and we will not invent one — ask us for real quotes instead.
Most owners arrive with one question — what does it cost — and leave with four decisions, in this order:
Average of at least two in the prior calendar year and at least two on day one of the plan year. W-2 only; 1099 contractors cannot go on a group plan whatever you call them internally. In Texas the count is of all employees, not only the eligible ones — the legislature changed that wording in 2013.
No Texas minimum, but carriers generally want half of employee-only, and 50 percent is also the tax-credit condition. Going above it lifts participation, which is what keeps you clear of the 75 percent threshold.
Look your people’s actual doctors up in the plan’s own directory, not the carrier’s marketing page. Texas plan names oversell network breadth, and a narrow network discovered in February is an expensive surprise.
Group coverage is not tied to the ACA open enrollment calendar — a Texas small business can start a plan in any month, and the effective date becomes your annual renewal point. The one date that matters is November 15 to December 15, if participation is tight. More on employer timing →
Two. Texas is one of the states that did not adopt the federal one-employee floor. Under Texas Insurance Code section 1501.002(14) a small employer is one that averaged at least two but not more than 50 employees during the preceding calendar year and employs at least two on the first day of the plan year. A true sole proprietor with no employees is an individual-market buyer in Texas, not a small group buyer.
Yes, and this is a Texas-specific advantage. Federal law generally does not treat a business made up only of two spouses as a group health plan. The Texas Department of Insurance has told carriers they must still issue coverage to a small employer with two or more employees even if those employees are married to one another, because Texas elects to regulate very small groups as small group coverage. Note the same is not true of the SHOP marketplace, whose stated rules require an employee other than owners, spouses and family.
Texas Insurance Code section 1501.154 sets it at 75 percent of eligible employees, and Texas is one of only a handful of states with a SHOP participation rate above the usual 70 percent. Employees who waive because they have other qualifying coverage - a spouse's plan, another job, Medicare, Medicaid, TRICARE or VA coverage - are taken out of the calculation rather than counted against you.
Apply between November 15 and December 15. Federal market rules at 45 CFR 147.104(b)(1) let a small group carrier limit coverage to that annual window for an employer who cannot meet a participation or contribution requirement, and TDI states plainly that carriers may not refuse a group outright on participation grounds. Inside that window the requirement does not apply. Do not confuse it with individual open enrollment, which runs November 1 to January 15.
No. For a group of 50 or fewer, federal rule 45 CFR 147.102 permits premiums to vary only by individual-versus-family coverage, rating area, age within a 3 to 1 band, and tobacco use within a 1.5 to 1 band, and says rates must not vary by any other factor. Industry classification, injury rate and prior claims experience are not permitted rating factors. This is the opposite of how workers' compensation is priced, which is why so many owners in high-hazard trades assume group health will be expensive and never ask.
No. Federal law allows a 1.5 to 1 tobacco variation, but TDI has told carriers that in Texas tobacco use is treated as a health status factor, and section 1501.206 prohibits adjusting an individual small group enrollee's rate on health status. A tobacco load may be reflected in the rate charged to the employer, but it has to be applied uniformly across every member of the group rather than assessed against the person who smokes.
Nothing. Carrier commission is built into the premium whether you use a broker or go direct, so the rate is the same either way. You may as well have someone shop all 27 rating areas, run the participation math and handle the filings.
Employee count, ages and ZIP codes is enough to start. We come back with real numbers from every carrier writing in your Texas rating area — not a range, your range. Licensed in Texas and 40+ states, bilingual, and free either way.