Offering group health insurance for the first time is one of the decisions owner-operators tend to overthink until they don't, and then underprepare for once they decide to move forward. The process has more moving parts than renewing an existing plan, but it's not complicated when you know what's required, what choices you're actually making, and in what order the steps happen. If you're running a business in North Dakota or Minnesota with somewhere between 5 and 50 employees and you're thinking about offering health coverage for the first time, this is the guide you need.
Who Qualifies to Offer Group Health Insurance
Before you start shopping plans, confirm that your business meets the eligibility requirements carriers use to evaluate group health applications.
Minimum employee count: Most carriers require at least two full-time equivalent employees to qualify for group health coverage. A sole owner with no W-2 employees typically can't access group health rates through a commercial carrier — that's an individual market situation. If you have two or more full-time employees (or the FTE equivalent of part-timers), you're generally eligible.
Participation requirement: Carriers typically require that 70% of eligible employees enroll in the plan (or waive with proof of coverage elsewhere — spousal employer coverage, Medicare, or similar). This prevents adverse selection, where only the sicker employees enroll. If you have 10 eligible employees and 4 plan to waive because they're on a spouse's plan, you likely still satisfy the participation requirement — the waived employees are usually excluded from the denominator.
Open enrollment timing: Most small group plans have annual open enrollment periods. Outside of open enrollment, you generally can't add employees who weren't enrolled initially (unless they experience a qualifying life event — marriage, birth of a child, loss of other coverage). Plan for your initial enrollment and keep the timing in mind.
Owner eligibility: In North Dakota and Minnesota, business owners (including sole proprietors with an eligible employee) can typically enroll in the group health plan they sponsor, which is often advantageous relative to individual market options.
Understanding Plan Types: PPO, HMO, and HDHP
Once you've confirmed eligibility, you'll choose between plan types. The most common options in the small group market:
PPO (Preferred Provider Organization): The most flexible option. Employees can see any doctor in or out of network, though out-of-network care costs more. No referral required to see a specialist. PPO plans typically have higher premiums but fewer restrictions on care. In markets with multiple health systems — like the Fargo-Moorhead area, which has access to Sanford, Essentia, and other networks — PPO flexibility matters.
HMO (Health Maintenance Organization): Requires employees to select a primary care physician who coordinates all care and refers them to specialists within the network. Lower premiums than PPO, but less flexibility. Works well in areas with strong single-network coverage. Can create friction for employees with existing specialist relationships outside the designated network.
HDHP (High Deductible Health Plan): Higher deductibles, lower premiums, and HSA (Health Savings Account) eligibility. Employees pay more out of pocket before coverage kicks in, but they can contribute pre-tax dollars to an HSA to cover those costs. HDHPs have become increasingly popular with small employers because the lower premiums reduce the employer contribution cost. They work best when paired with meaningful employer HSA contributions.
For a first-time group health offering, many small businesses in ND and MN start with a PPO or HDHP. The choice depends heavily on your budget, your employees' healthcare utilization patterns, and the carrier networks available in your geography.
How Employer and Employee Contributions Work
When you offer group health insurance, you're deciding how much of the premium you'll cover and how much the employee will pay through payroll deductions.
The IRS doesn't mandate a specific employer contribution percentage for small groups (ACA requirements for minimum contributions apply to Applicable Large Employers — businesses with 50+ full-time equivalents). In practice, small businesses in North Dakota and Minnesota typically contribute 50–100% of the employee premium, with employees paying the difference.
A few benchmarks: the national average employer contribution for single coverage is around 80–82% of the premium. For small businesses specifically, 50% employer contribution is a common starting point. At 100% employer-paid for single coverage (employee pays nothing for their own coverage), you're at the high end of what small businesses offer.
Family coverage is where this gets more complex. If the employee adds a spouse, children, or the full family to the plan, the additional premium can be significant. Employers often contribute a fixed dollar amount toward family coverage rather than a percentage, because family premiums can run $1,500–$2,000+ per month and requiring the employer to cover 80% of that amount significantly raises total benefit spend.
Working with an Independent Broker vs. Going Direct
You can approach group health through two channels: working with an independent broker, or going directly to a carrier.
Going direct: You contact a carrier (Sanford Health Plan, Medica, Blue Cross Blue Shield of North Dakota or Minnesota, or another carrier in your market), get a quote, and enroll through their process. You're limited to what that carrier offers, and you have no one advocating for your interests in the process.
Working with an independent broker: A broker like Kain Carlson shops your group across multiple carriers, presents options with clear comparisons, and manages the enrollment process — without charging you a separate fee. Brokers are compensated by carriers through commissions built into the premium, which means you get professional assistance at no direct cost.
The practical advantage of an independent broker is access to the full market plus an advisor who knows your business context. When it's time to renew — which is every 12 months — the broker reviews whether your current carrier still offers the best value or whether the market has changed. That ongoing relationship prevents you from staying on a plan that's no longer competitive simply because you didn't know to question it.
The Enrollment Timeline
Planning backward from your desired effective date:
- 90 days out: Decide on contribution strategy and begin the carrier shopping process. Gather employee census data (names, dates of birth, zip codes, dependent information for anyone who plans to enroll).
- 60 days out: Review carrier proposals, select a plan, and prepare employee communication materials.
- 30 days out: Hold enrollment meetings, distribute plan summaries, collect employee elections and waivers.
- Enrollment close: Submit completed census and elections to the carrier. Confirm effective date (usually the 1st of the month following submission, though this varies).
- Before effective date: Set up payroll deductions for employee contribution amounts. Distribute insurance cards and member ID information.
For a January 1 effective date — common for businesses that want the benefits year to align with the calendar year — begin the process by October 1.
Visit /employee-benefits to understand how Kain approaches benefits strategy for owner-operated businesses, or schedule a conversation to start the process for your group.
Kain Carlson is an independent insurance advisor based in Fargo, ND, licensed in North Dakota and Minnesota. He works with owner-operated businesses across all three coverage pillars — commercial, benefits, and personal — under one advisory relationship. Schedule a review to see where your coverage stands.