A group plan is bought by an employer to cover its employees, with the employer paying part of the premium on a tax-advantaged basis; marketplace insurance is bought by individuals at healthcare.gov, may qualify for income-based subsidies, and stays with the person if they change jobs. Group plans have participation and contribution rules, while marketplace plans have none.
When you’re a small business owner in Florida trying to figure out how to handle health insurance — for yourself, for your employees, or both — understanding how each option works is the first step to making a smart decision for your business.
There’s also a third option gaining traction that I’ll touch on at the end: the Individual Coverage HRA (ICHRA). But let’s start with the basics.
What Is Group Health Insurance?
A group health plan is a policy purchased by an employer that covers employees (and often their dependents). The employer chooses a carrier and a plan, pays a portion of the premium, and employees pay the rest through payroll deductions. Traditionally, this has been the standard way businesses provide health benefits.
In Florida, small group plans (for businesses with 1–50 employees) are offered by carriers like Florida Blue, UnitedHealthcare, Cigna, and AvMed, among others. For 2027, two small group carriers (Florida Health Care Plan and National Health Insurance Co) are leaving the market, and the remaining carriers have filed average increases of about 11.4%. There are state and federal rules governing how small group plans must be priced and what they must cover.
What Is Marketplace Insurance?
ACA marketplace plans (also called individual and family plans) are purchased by individuals — not employers — through the federal marketplace at healthcare.gov. Florida uses the federal exchange, so all individual ACA plans in Florida are bought there. Employees who don’t have access to affordable employer coverage, and self-employed individuals, typically use the marketplace.
Marketplace plans come in Bronze, Silver, and Gold tiers and may qualify for premium tax credits (subsidies) based on income. Since the enhanced subsidies expired at the end of 2025, those credits are generally limited to households between 100% and 400% of the Federal Poverty Level — about $15,960 to $63,840 for a single person. Current individual carriers in Florida include Florida Blue, Ambetter from Sunshine Health, Oscar, and UnitedHealthcare. For more, see our guide to subsidies and tax credits.
Key Differences: Eligibility and Setup
To offer a group plan, your business generally needs to meet a minimum participation requirement — typically at least 70% of eligible employees must enroll. You also need to contribute a minimum percentage of the premium (often 50% or more of the employee-only cost). If you’re a sole proprietor with no W-2 employees, a traditional group plan isn’t typically available to you; the individual marketplace is your path.
Marketplace plans have no participation requirements. Each person shops and enrolls individually based on their own household income and preferences.
Costs and Employer Contributions
With a group plan, the employer pays a defined share of the premium — and that employer contribution is a tax-deductible business expense. Employees pay their share pre-tax through a Section 125 (cafeteria) plan, which reduces their taxable wages. This tax treatment is one of the meaningful advantages of employer-sponsored group coverage.
With individual marketplace plans, premiums are paid by the employee directly (or the self-employed owner directly). Subsidies are available based on income. Employers generally can’t contribute directly to an employee’s marketplace plan — unless they set up an HRA, which I’ll address below.
Portability
One of the most important differences in today’s workforce: marketplace plans are portable. An employee’s individual marketplace plan belongs to them. If they leave your company, they keep their coverage. There’s no COBRA election, no gap, no scramble to find new insurance.
With a group plan, coverage ends when employment ends. Employees may be eligible for COBRA continuation coverage, but COBRA premiums are often significantly higher because the former employee is paying both their share and the employer’s share, plus an administrative fee.
Subsidies and the Affordability Test
Here’s an important interaction between group plans and marketplace subsidies. If an employer offers a group plan that is considered “affordable” under ACA rules (defined as the employee-only premium not exceeding 9.96% of the employee’s household income for 2026, or 10.22% for 2027), the employee is not eligible for marketplace subsidies — even if they’d qualify based on their income alone, and even if they don’t actually enroll in the group plan.
This matters when you’re deciding whether to offer group coverage. If your employees might qualify for significant marketplace subsidies, offering a bare-minimum group plan could actually cost them more than it helps — and they’d lose their subsidy eligibility in the process.
Which Option Makes Sense for Different Business Sizes?
- Solo self-employed / no employees: The ACA marketplace is typically your best option. You may qualify for subsidies if your household income is between 100% and 400% FPL, and you can take the self-employed health insurance deduction on your premiums. See how self-employed people use the ACA marketplace.
- 1–5 employees: Group plans are available but can be expensive at small sizes. An ICHRA or marketplace guidance for employees may be more cost-effective and flexible.
- 6–20 employees: Group plans become more attractive as the risk pool grows and administrative costs are spread across more people. This is where comparing group vs. marketplace makes the most sense.
- 20–50 employees: Group plans are generally the standard approach and may be important for talent attraction and retention.
The ICHRA: A Third Path Worth Knowing About
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a relatively recent option that blends the best of both worlds. Instead of offering a group plan, an employer sets a defined dollar amount they’ll reimburse each employee tax-free for individual health insurance premiums. Employees shop for their own marketplace plans, pick what works for them, and submit for reimbursement.
ICHRAs give employers cost predictability and flexibility. They give employees choice. And the employer contributions are still tax-deductible. The tradeoff is that employees offered an ICHRA that meets the affordability test can’t also claim marketplace subsidies — so the ICHRA amount needs to be meaningful to offset that loss. Still, for small businesses that want to offer a benefit without the complexity of a group plan, ICHRAs are worth a serious look. Very small employers can also consider a QSEHRA, capped for 2026 at $6,450 self-only and $13,100 family.
| Group plan | Marketplace plan | |
|---|---|---|
| Who buys it | Employer | Individual |
| Participation rules | Usually ~70% of eligible employees | None |
| Subsidies | No (employer contribution is tax-free) | Yes, 100–400% FPL |
| Portability | Ends with the job (COBRA may apply) | Stays with the person |
If you’re still sizing up the numbers, our breakdown of what small business health insurance actually costs is a good next read.
The Right Answer Depends on Your Specific Situation
There’s no one-size-fits-all answer here. The best approach for your business depends on how many employees you have, what they’d qualify for on the marketplace, how much you want to contribute, and what your budget allows. A licensed broker can model out the costs and tradeoffs for your specific situation — and help you avoid the common mistake of assuming one option is automatically better than the other.
Frequently Asked Questions
Is group health insurance cheaper than marketplace insurance?
It depends. Group plans let the employer contribution and employee payroll deductions be paid pre-tax, which lowers the net cost. But marketplace plans can be cheaper for employees who qualify for premium tax credits, generally those with household income between 100% and 400% FPL. A broker can compare both for your team.
Can my employees get marketplace subsidies if I offer a group plan?
Only if your group plan is unaffordable or doesn’t provide minimum value. For 2026, coverage is affordable if the employee-only premium is no more than 9.96% of household income; for 2027 the threshold is 10.22%. If your plan passes that test, employees can’t get subsidies even if they decline it.
What is an ICHRA and how is it different from a group plan?
An ICHRA lets an employer reimburse employees tax-free, up to a set amount, for individual health insurance they choose themselves. Unlike a group plan, there are no participation minimums and the employer controls costs with a fixed allowance. Employees offered an affordable ICHRA can’t also claim marketplace subsidies.
Whether you’re exploring group coverage for the first time, weighing an ICHRA, or just trying to understand your options, I’ll model the costs for your team. I’m Michael McAllister, owner of Choice Health Insurance Brokers in DeLand, FL — a licensed broker appointed with 200 carriers (NPN 18229135). My help costs you nothing; I’m paid by the carriers. Call or text me at 321-230-9536 or visit choice.healthcare for a free quote and a plan comparison built around your situation.