How Much Does Group Health Insurance Cost per Employee in Texas?

If you're a small business owner thinking about offering health insurance to your employees, the first question is usually cost: how much does a group health insurance plan cost per employee? The short answer: in Texas, the average group health insurance premium in 2025 was about $8,543 a year for single coverage and $25,053 a year for family coverage, per enrolled employee. Employers paid most of that. This guide breaks down what Texas employers and employees pay, what drives your premium, and practical ways a small business can offer good coverage on a budget.

Average group health insurance costs in Texas

According to KFF's state health data for 2025, here is what employer-sponsored health insurance cost per enrolled employee in Texas, compared with the national average:

Texas premiums run a little below the national average. On average, Texas employers paid about 81% of the premium for single coverage and about 68% for family coverage.

What small businesses pay for health insurance nationally

KFF's 2025 Employer Health Benefits Survey, a separate national survey of employers, found that the average annual premium was $9,325 for single coverage and $26,993 for family coverage, up 5% and 6% from 2024. For small firms (under 200 workers), the averages were $9,211 for single coverage and $26,054 for family coverage.

A few other findings matter for small employers:

• Workers at small firms pay more for family coverage: an average of $8,889 a year in 2025.
• Deductibles are higher at small firms: the average single-coverage deductible was $2,631 at small firms, compared with $1,886 across all firms.
• Not every small business offers coverage: 59% of small firms offered health benefits.
• Level-funded plans are common: 37% of covered workers at small firms were in a level-funded plan.

Because these numbers come from different surveys, they don't match exactly, but they point the same way: expect roughly $700 to $800 a month per employee for single coverage, and well over $2,000 a month for family coverage, before any employer and employee cost sharing.

What affects Texas small group health insurance premiums

In Texas, a small employer health plan covers businesses with 2 to 50 employees. Insurers can't deny coverage or charge more because of employees' health conditions. Instead, small group premiums are based on a few factors, according to the Texas Department of Insurance:

• Employee ages: the premium for a 64-year-old can be up to three times the premium for a 21-year-old, so a younger workforce usually costs less.
• Tobacco use: plans can charge tobacco users up to 50% more.
• Location: costs vary by area of the state. Houston, Dallas, Austin and San Antonio each have different rates and provider networks.
• Plan type and network: HMOs and plans with smaller provider networks generally cost less than broad PPO plans.
• Deductibles and copays: plans with higher deductibles have lower premiums.
• Medical cost trends: insurers can raise rates as health care costs rise each year.

Group size matters too. Larger employers with more than 50 employees are rated differently, and their claims history often affects renewal rates. To quote a small group plan, an insurer or health insurance broker will ask for an employee census: each employee's age, ZIP code and whether they want single or family coverage. The average employee age in your group is one of the biggest drivers of your health insurance premiums.

How much Texas employers pay for health insurance

Texas law doesn't require an employer to pay any part of employee premiums. In practice, most insurers require the employer to pay at least 50% of the employee-only premium. Many employers pay more than the minimum for employee-only coverage and ask employees to pay a larger share of the cost to add a spouse or children.

Insurers also have participation rules. Most require at least 75% of eligible full-time employees to enroll, not counting employees who have other coverage, such as through a spouse. If you offer coverage, you must offer it to every employee who works 30 or more hours a week. If your group doesn't meet participation, an insurer may require you to wait for the small group open enrollment period from November 1 through January 15. A business owner can enroll as long as at least one employee also enrolls.

Small group coverage vs. individual health insurance options

Traditional group health insurance isn't the only way to help employees get covered. Small businesses in Texas have three main health insurance options:

• Small group health insurance plans: one group plan for all eligible employees, with the employer paying part of the premium. This is the most familiar option and works well when most employees want coverage.
• Level-funded group plans: group coverage with a fixed monthly cost and a possible refund if claims are low, often a good fit for groups with healthy, lower claims.
• Individual coverage health reimbursement arrangements (ICHRA) and QSEHRAs: instead of a group plan, the employer gives each employee a tax-free monthly allowance to buy individual health insurance. This can work well for small or spread-out teams, or when many employees would not meet group participation rules.

The right choice depends on your budget, how many employees want coverage, and where they live. A health insurance broker can price all three side by side.

Example: what a 10-employee Texas business might pay

Here's a simple illustration using the Texas averages above. Say a business has 10 employees on the plan: 7 choose single coverage and 3 choose family coverage, and the employer contributes at the Texas average.

• Employer cost for 7 single employees: 7 x $6,905 = $48,335 a year
• Employer cost for 3 family employees: 3 x $17,140 = $51,420 a year
• Total employer cost: about $99,755 a year, or roughly $8,300 a month

Your actual cost could be much higher or lower depending on your employees' ages, the plan you choose, and how much of the premium you decide to pay. If you pay 75% of employee-only coverage and employees pay for dependents, your cost drops significantly. That's why it pays to compare several plan designs before you decide.

How Texas small business owners can lower health insurance costs

Offering health insurance doesn't have to mean taking on the full cost. Common strategies for Texas small businesses include:

• Level-funded health plans: you pay a set monthly amount, and if your group's claims are low, you may get money back at year end. Learn more in our beginner's guide to level-funded health insurance.
• HSA-qualified high-deductible plans: lower premiums paired with a health savings account employees can fund with pre-tax dollars.
• Smart contribution strategy: pay a fixed percentage of employee-only coverage, or offer a base plan and a buy-up plan.
• Health reimbursement arrangements: a QSEHRA or ICHRA lets you give employees a set tax-free allowance to buy individual coverage, so your cost is predictable.
• Small business health care tax credit: employers with fewer than 25 full-time equivalent employees, average wages below an annual limit, and at least 50% of employee-only premiums paid may qualify for a federal credit of up to 50% of premiums for two years when they buy coverage through the SHOP Marketplace.
• Voluntary benefits and telemedicine: dental, vision, accident and critical illness coverage employees pay for through payroll, plus telemedicine for everyday care. Ask about our complimentary one-year telemedicine value-add for client companies.

Compare group health insurance options for your Texas business

Benefits On Us is an independent agency in Houston that has helped employers across Texas since 2001. We compare group health and dental plans from multiple carriers, show you the real cost per employee for each option, and help you build a complete group benefits package. If you're in the Houston area, see our employee benefits services in Houston. As an independent health insurance agency serving Texas small business owners, we can run quotes for your group from your employee census, explain each plan in plain language and handle enrollment. Book a free 15-minute call, in English or Spanish, to get started.

Frequently asked questions

How much does health insurance cost per employee per month in Texas?

In 2025, the average total premium for single coverage in Texas was about $712 a month per enrolled employee, with the employer paying about $575 and the employee about $137. Family coverage averaged about $2,088 a month.

Is a small business required to offer health insurance in Texas?

No. Businesses with fewer than 50 full-time equivalent employees are not required to offer health insurance. Under the Affordable Care Act, employers with 50 or more full-time equivalent employees must offer affordable coverage to full-time employees or may owe a penalty.

Can a business with two employees get group health insurance in Texas?

Yes. In Texas, a small employer health plan is available to businesses with 2 to 50 employees. The owner can enroll as long as at least one employee also enrolls.

What percentage of health insurance do employers pay?

Texas law doesn't set a minimum, but most insurers require employers to pay at least 50% of employee-only premiums. On average, Texas employers paid about 81% of single coverage premiums and about 68% of family coverage premiums in 2025.

Is group health insurance tax deductible?

Yes. Premiums an employer pays for employee health coverage are generally a deductible business expense, and the employee's share can usually be paid with pre-tax dollars through a Section 125 premium-only plan. Check with your tax advisor about your situation.