Medically reviewed by Jawad Arshad, MD, FACEP. Last reviewed: September 29, 2026.
Mid size business group health insurance is a group plan for an employer with about 51 to 250 employees. At that size, most states treat you as a large group, and the ACA employer mandate applies. This guide compares your plan options, shows what the coverage costs, and explains where a Section 125 plan fits.
Key facts
- Average 2025 annual premium: $9,325 for single coverage and $26,993 for family coverage (KFF Employer Health Benefits Survey, 2025).
- Workers pay about 16% of a single premium and 26% of a family premium (KFF, 2025).
- 27% of covered workers at firms with 10 to 199 workers are in self-funded plans, versus 80% at firms with 200 or more (KFF, 2025).
- An employer with at least 50 full-time employees, including full-time equivalents, is an applicable large employer (IRS, 2026).
- The 2026 penalty for offering no coverage is $3,340 per full-time employee, after the first 30 (IRS Revenue Procedure 2025-26).
- Employer FICA is 7.65% of wages, and Section 125 pre-tax deductions are exempt from it (IRS Publication 15-B, 2026).
What is mid size business group health insurance?
Mid size business group health insurance is a group plan for an employer that has outgrown small group rules, usually at 51 or more employees. In all but three states in 2026, small group means 50 employees or fewer. California, New York and Vermont use 100 (healthinsurance.org, 2026).
That line matters because the ACA treats the two markets differently. Small group plans must cover essential health benefits, follow metal tiers, and use community rating. Large group plans are not held to those three rules (healthinsurance.org, 2026). Both markets share the out-of-pocket maximum, coverage of adult children to age 26, and a waiting period cap of 90 days.
In practice, a mid size employer gets more freedom to design a plan. It also gets more risk, because the premium is priced on the group's own claims rather than a state-wide pool.
What are the main group health plan options for a mid size employer?
A mid size employer has four main options: fully insured, level-funded, self-funded, and ICHRA. Each one shifts a different amount of claims risk between the employer and the carrier.
| Plan type | Who carries claims risk | Best fit |
|---|---|---|
| Fully insured | The carrier | Employers who want fixed monthly premiums and no claims risk |
| Level-funded | Shared: employer funds a fixed monthly amount, stop-loss covers large claims | Groups with healthy claims history that want possible refunds |
| Self-funded | The employer, with stop-loss insurance | Larger groups with steady claims data and cash reserves |
| ICHRA | The employee buys the plan, the employer reimburses a set amount | Employers who want a fixed budget and no group plan to manage |
Self-funding is common as employers grow. KFF's 2025 survey found 27% of covered workers at firms with 10 to 199 workers were in self-funded plans, and 80% at firms with 200 or more. Our fully insured versus self-funded guide explains the trade-offs, and the level-funded plan guide covers the middle option.
An ICHRA, or individual coverage health reimbursement arrangement, is a different model. The employer sets a monthly allowance and employees pick their own plan. Read how an ICHRA works before you compare it against a group plan.
How much does group health insurance cost for a mid size business?
Group health insurance cost for a mid size business averaged $9,325 per year for single coverage and $26,993 for family coverage in 2025, according to the KFF Employer Health Benefits Survey. Firms with 10 to 199 workers averaged $9,211 for single and $26,054 for family. Firms with 200 or more averaged $9,361 and $27,280.
Workers pay part of that. KFF found workers pay $1,440 for single coverage and $6,850 for family coverage, or about 16% and 26% of the premium. Deductibles differ by size too. Single-coverage deductibles averaged $2,631 at firms with 10 to 199 workers and $1,670 at larger firms (KFF, 2025).
Here is a worked example. Take a 120-employee company with 100 employees on the plan, 60 single and 40 family, using KFF's 2025 averages. This is a hypothetical.
| Line | Math | Annual amount |
|---|---|---|
| Total premium, 60 single | 60 x $9,325 | $559,500 |
| Total premium, 40 family | 40 x $26,993 | $1,079,720 |
| Total premium | $1,639,220 | |
| Employee share, single | 60 x $1,440 | $86,400 |
| Employee share, family | 40 x $6,850 | $274,000 |
| Total employee share | $360,400 | |
| Employer share | $1,639,220 minus $360,400 | $1,278,820 |
The employees' $360,400 share is the part a Section 125 plan can move to pre-tax. At the 7.65% FICA rate, the employer avoids $27,570.60 in payroll tax per year on that amount. Our small business health insurance cost guide has more cost data by firm size.
What ACA rules start when you reach 50 employees?
The ACA employer mandate starts at 50 full-time employees, counting full-time equivalents. The IRS calls an employer at that size an applicable large employer, and the employer must offer minimum essential coverage to at least 95% of its full-time employees and their dependents. That coverage must also be affordable and provide minimum value, or the employer risks a payment (IRS, 2026).
The 2026 payment amounts come from IRS Revenue Procedure 2025-26. The penalty for not offering coverage is $3,340 per full-time employee, after subtracting the first 30. The penalty when coverage is offered but is unaffordable or thin is $5,010 per employee who gets a premium tax credit.
Here is the first penalty in dollars. An employer with 120 full-time employees that offers no coverage owes (120 minus 30) x $3,340, which is $300,600 for the year (IRC Section 4980H). Coverage is affordable for 2026 when the employee's cost for the lowest-priced self-only plan does not exceed 9.96% of household income (IRS Revenue Procedure 2025-25). Our ACA employer mandate guide covers reporting and the look-back method.
How does a Section 125 plan work with a group health plan?
A Section 125 plan lets employees pay their share of the group premium before taxes, which cuts payroll tax for both sides. Employer-paid premiums are already tax-free. The Section 125 plan changes the treatment of the employee's own share.
A cafeteria plan needs a written plan document and must pass nondiscrimination testing. IRS Publication 15-B (2026) says a plan fails if more than 25% of the tax-free benefits go to key employees. Our nondiscrimination testing guide explains the tests.
Summit Health Benefits is a Section 125 plan administrator. Summit charges $35 per enrolled employee per month. That fee is paid from the FICA savings the plan creates, so the employer still nets about $56 to $101 per enrolled employee per month. The exact figure depends on what employees elect. For the full rules, read our Section 125 cafeteria plan guide.
Results depend on your plan terms and IRS rules. Not legal or tax advice.
How do you compare quotes for a mid size group plan?
Compare quotes by asking every carrier and broker for the same information on the same date. A quote comparison only works when the inputs match. Use the group health insurance quotes checklist and the email below.
Subject: Group health quote request for [company name]<br>
Hello, we are a [number]-employee company in [state] looking at group health options for [effective date]. Please quote fully insured, level-funded and self-funded designs. Attached are our employee census, our current renewal and 24 months of claims if available. Please include monthly cost by tier, the stop-loss terms for any funded option, network details, and how you handle ICHRA-eligible classes. We would like your quote by [date].
Then review each option against three questions. How much claims risk do we take? What is our worst-case cost? What does the plan cost per employee per month, employer share and employee share? Our best small business health insurance guide lists carriers to include.
Compare Your Mid Size Group Plan to a Section 125 Setup
A benefits expert reviews your current plan and shows a side-by-side of what a Section 125 setup would change in your payroll taxes.
Frequently Asked Questions
What is midsize group health insurance?
What are the best midsize group health plans?
How many employees make a large group for health insurance?
How much does group health insurance cost for a mid size business?
Is affordable group health insurance for mid sized employers possible?
Do large group health plans have to cover essential health benefits?
Sources: KFF, 2025 Employer Health Benefits Survey (2025); healthinsurance.org, How Obamacare changed group health insurance (2026); IRS, Employer Shared Responsibility Provisions (2026); IRS Revenue Procedure 2025-26 (2026 Section 4980H payment amounts); IRS Revenue Procedure 2025-25 (2026 affordability percentage, 9.96%); IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits (2026); Internal Revenue Code Section 4980H.