Top 5 Mistakes Small Businesses Make When Getting Health Insurance

Offering health insurance is one of the most important decisions a small business can make. It impacts your ability to attract talent, retain employees, and support your team’s well-being. Too often, business owners rush the process or select plans that misalign with their employee's actual needs. Here are the top five mistakes to avoid when shopping for health insurance as a small business.

1. Waiting Until the Last Minute
The most common health insurance renewal period is January. We recommend starting to evaluate in August-September to give adequate runway to explore a new strategy, gather employee input and roll out any changes to employees with satisfactory time.

2. Only Looking at Premiums
The monthly cost is of course important, yet it’s one part of the equation. Lower premium plans often come with higher deductibles, limited networks, and more out-of-pocket costs for employees. Look at the full picture, including deductibles, copays, coinsurance, and RX costs. A plan that appears cheaper upfront can end up costing much more over time.

3. Ignoring Employee Feedback
Each employee has different health circumstances. Some prioritize a wide provider network, others care about prescription coverage or mental health benefits. A quick internal survey can help redefine the benefits suite on an annual basis. When employees feel heard, participation increases and satisfaction with the plan improves.

4. Accepting a Renewal Increase

Rising insurance costs—driven by escalating prescription drug prices, advanced therapies such as GLP-1 medications, and continued network consolidation—are putting upward pressure on premiums. According to KFF, family coverage premiums increased by 7% in 2024 alone.

To help small businesses manage these rising costs, we recommend beginning the evaluation process 4 months before your renewal (for example, in September for a January 1st renewal). This timing allows you to evaluate alternative options without carriers factoring in your existing renewal rates. Proactively benchmarking your current rates can lead to savings of 10–35% on medical premiums.

5. Managing the Renewal Process Without a Broker
Health insurance is complex. Plans change each year, carriers adjust networks, and pricing structures are constantly evolving. A licensed broker can help you compare options, negotiate down renewal pricing, and explain plan designs in plain language. They also serve as ongoing support when questions or billing issues arise.

Conclusion
Health insurance isn’t just a checkbox. It’s a financial and strategic decision that affects your business and your team. Avoid these common mistakes by starting early, considering total cost, involving your employees, staying compliant, and working with a trusted broker. Doing it right the first time can save you time, money, and a lot of unnecessary stress.

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