How to Get Medical Insurance If You Have a Small Business
Do you need medical insurance if you own a small business?
You don’t need medical insurance to satisfy any legal requirements, but medical insurance can help a small business stay healthy, productive, and competitive.
Provincial health plans cover Canadian residents for medically necessary care; however, that coverage leaves gaps like vision, dental, paramedical services, and some types of emergency care.
If you own a small business in Canada, there are some important benefits to securing health insurance:
- Benefits packages attract top talent in a competitive job market
- Employee benefits help retain employees and increase satisfaction
- Group benefits plans improve your company’s reputation
- Employee well-being is tied to positive company culture and morale
- Increased productivity and fewer sick days with healthier employees
Nearly 80% of PolicyMe applicants have no prior health coverage. Many are freelancers, gig workers, or small business owners turning to individual plans to protect against unexpected dental and prescription costs.
How medical insurance works when you own a small business
Here’s how you set up and manage medical insurance when you own a small business:
1. Find a medical insurance provider and compare plans. Just you or a few others? Companies like PolicyMe offer a range of individual plans. If you have a larger team of employees, companies like Manulife and Sun Life may offer small-group health plans. Get quotes to understand your costs for each plan, and make sure you consider exclusions, annual limits, waiting periods, and dependent eligibility.
2. Confirm eligibility. If you’re a business owner actively working in your business, you’re typically automatically eligible for benefits. If you have a team, you likely want to include full-time, permanent staff. Part-time or seasonal employees, and dependents like spouses, partners, and children, may or may not be eligible.
3. Enroll. To enroll, you’ll need to provide company details like business type, number of employees, and the list of employees who need coverage. Coverage doesn’t kick in until the waiting period is up; some plans don’t have waiting periods, while others require three months for new employees or new dependents.
Managing medical insurance for small businesses
When you’re managing a health plan for your business, you’ll need to consider costs and administrative work.
Costs
- Premiums are typically shared by the employer and the employee every month
- Costs rise for every added benefit (like wellness programs and mental health coverage)
- Larger groups may qualify for lower per-employee rates (good for growing companies!)
- Administrative fees may apply
- Prices may fluctuate depending on the insurance market
Premiums may be tax-deductible for the business. While the CRA offers guidance on eligible expenses, it’s a good idea to work with a tax professional to ensure you comply with the rules.
Admin
- Initial plan setup takes time and money
- Requires ongoing attention to detail, including educating employees, managing employee enrollment, collecting and remitting payments, managing annual renewals, claims support, and updating information as staff leave
- Can be overwhelming without dedicated HR staff
It can be tricky but satisfying to find a plan that meets diverse healthcare needs and stays on budget. Some may prioritize dental or vision while others may be more concerned with mental health or prescription medications. The right plan will retain good people, meet employee needs, and not break the bank.
Types of medical insurance options for small-business owners
Depending on the business and number of employees, small business owners may be able to choose between individual health insurance coverage, small-group health benefits, and health spending accounts.
Individual plans (for owner-operators & freelancers)
- Who it’s for: Sole proprietors, freelancers, microbusinesses, or self-employed people
- Coverage: Can include prescription drugs, dental coverage, vision, and paramedical services
- Admin: Very simple—enroll yourself and any dependents, then pay premiums directly to the insurer
Individual plans are portable, so they’ll stick with you even if your business changes. While costs may be higher than with traditional group benefits, you can choose a plan that aligns with your needs and anticipated usage.
Small-group health benefits (up to 50 employees)
- Who it’s for: Small businesses with a team of employees
- Coverage: Can include prescription drugs, dental insurance, vision, paramedical services, and extended health coverage (like travel or private hospital coverage)
- Admin: Moderate—employees can enroll at hire or annually, and premiums are typically billed monthly
This is a popular option for small businesses. It allows employers to offer all employees a standard package of health benefits, covering services like dental, vision, and prescription drugs. Risk pooling means that per-person pricing may be lower, but minimum participation rules mean that insurers might require that at least 50 to 75% of eligible employees enroll to maintain the group rate.
Employer-funded health spending accounts
- Who it’s for: Small businesses that value flexible, employee-directed coverage with a pre-set cap for financial predictability
- Coverage: Flexible—employees can use these funds to pay for services not covered by provincial health plans, such as massage therapy, prescription eyewear, or private nursing care
- Admin: Moderate—the employer sets annual limits and then manages employee claims and disburses funds
HSAs, or health spending accounts, are employer-funded accounts. The employer sets aside a certain amount of cash per employee each year and then reimburses employees for eligible medical expenses (according to the CRA guidelines) from the healthcare spending account. Contributions are typically deductible for the employer and non-taxable or tax-free for employees.
What does medical insurance cover?
Medical insurance in Canada typically covers services that are not covered by provincial health plans:
- Prescription drugs
- Paramedical services (physio, chiro, massage, therapy, etc.)
- Dental benefits
- Vision care
- Medical equipment
- Emergency travel
Covered services vary by plan and insurer. For instance, it’s rare for a plan to cover fertility benefits and cosmetic procedures, but there are a lot of plans that cover dental, vision, and/or prescription drugs.
Higher-tier plans cover more services with higher maximums. A top-tier plan might cover major dental work at $1,800 per year, whereas a basic plan might cover only preventive cleanings up to $500 per year.
In other words, you can find a medical insurance plan that’s cost-effective and tailored to the care you (and your employees) need.
How much does medical insurance cost for small businesses?
Medical insurance for small businesses may cost anywhere between $75 and $350 per month per person—costs are on the lower end for basic group plans and individual plans, and increase as coverage increases.
Here are some sample rates for individual health and dental plans from PolicyMe:
The best way to estimate costs for your business is to actually request a quote. Exact costs are hard to pin down because coverage levels, province, employee count, and plan details vary a lot from one business to the next.
Here are factors that could push the cost of medical insurance up or down:
- Plan type: Basic plans cost less, but they’re also less attractive to employees.
- Benefits offered: Higher limits are valuable, but you’ll pay more for extra benefits.
- Number of employees: More people usually means a higher overall cost, but you can sometimes unlock savings through economies of scale.
- Province: Insurers base your cost on local risk and cost structures. For instance, BC and Ontario have some of the highest healthcare costs in Canada.
Before you decide on a plan or make cost-sharing decisions, make sure to understand the real expense predicted usage of a plan.
Should you choose individual or group coverage?
Whether you should opt for individual health insurance or group coverage for your small business depends on your budget and retention goals.
Solo owners: Individual coverage
- Individual plans offer predictable premiums and flexible coverage
- Group plans don’t apply without any employees
Very small teams (1–3 employees): Individual plans or a small-group plan
- Individual plans allow you to tailor coverage to the employee, if needed
- Group plans may require too much HR support for such a small team
- Your approach to benefits can grow as your business grows
Growing teams (4+ employees): Small-group plan
- Group plans may become cost-efficient with 4+ employees
- Admin is simpler with a single monthly contract
- Group plans simplify employee relations with a standard coverage offering
How to choose the right medical insurance plan
You need to know three things to choose the right medical plan for your small business: the team’s healthcare needs, your budget, and your goals for the future.
1. Identify your needs
Do you (and your employees) value prescription drugs and paramedical coverage, or are they looking for basic dental and vision care? What about managing ongoing chronic conditions? The perk of being a small business is that you can find a plan (or plans) that’s best aligned with your team’s real usage patterns.
2. Crunch the numbers
Compare current or anticipated healthcare expenses to what you’d pay for a medical plan. What would each model cost you? Do you have the liquidity to fund an HSA at the top of the year and reimburse employees up to a certain amount?
If you’re considering going without insurance, routine care might fit neatly into your budget out-of-pocket. But high-cost situations like major dental procedures, out-of-province travel, and brand-name drugs could drain your account.
If you’re a solo owner, compare your list of expenses to the Medical Expense Tax Credit list to see what’s deductible.
3. Consider the administrative load and read the fine print.
Group plans are more hands-off, but you still need someone to take care of enrollment and answer inquiries while you’re running the business. You also want to ensure that you understand the policy’s rules around exclusions, waiting periods, maximums, and pre-existing conditions.
Is medical insurance worth it for small-business owners?
Medical insurance can be a smart investment, but it’s important to match the right plan to your needs.
Health insurance is probably worth it if:
Health insurance may not be worth it for your small business if:
Medical insurance can be a valuable tool for accessing health care and building a competitive business, but it’s only worth it if the coverage fits your budget and you can manage the plan(s) effectively.
FAQ: Medical insurance for small business
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Prices listed on this page are based on information available as of October 2025. The prices shown are for general reference only and may vary based on factors like your age, location, and product selection.