Texas brought back an option in 2017 that many small business owners thought was gone forever: husband-and-wife group health insurance. If you run a business with just you and your spouse, you’ve likely wondered whether you could access the benefits, tax advantages, and broader networks of group coverage—or if you’re stuck shopping the individual marketplace.

The short answer: It depends on your situation. While federal rules generally define a “group” as requiring at least two non-owner employees, Texas does offer pathways for married couples to qualify under specific circumstances. Here’s everything you need to know using official Texas Department of Insurance regulations, IRS guidelines, and CMS data.

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The Federal Starting Point: What Counts as a “Group”?

Under the Affordable Care Act (ACA), small group health insurance is designed for businesses with 2 to 50 full-time equivalent (FTE) employees in Texas. The catch? Spouses, owners, and business partners typically don’t count toward that employee threshold for federal purposes.

According to the IRS, when calculating FTEs for health care tax credit purposes, you must exclude:

• Owners of sole proprietorships
• Partners in partnerships
• Shareholders of S Corporations owning more than 2%
• Owners of more than 5% of the business
• Family members of any of the above

Source: IRS Small Business Health Care Tax Credit Guidelines

That means if your “business” consists only of you and your spouse—with no additional W-2 employees—you generally won’t qualify for traditional group coverage in most states. Instead, you’d shop for individual or family plans on the ACA marketplace or directly through carriers.

However, Texas has carved out exceptions that allow certain married couples to access group plans under official state regulations.

Texas Exception: Official Requirements for Couple Eligibility

The Texas Department of Insurance officially regulates small group health insurance with specific participation requirements. According to Texas Administrative Code § 26.521 and state insurance law, most insurance companies mandate at least 75% of full-time employees participate in group health plans.

Here’s What You Need to Qualify:

1. Business Structure & Employee Status

You must operate a legitimate business entity (LLC, S-corp, partnership) where both spouses are actively involved. One spouse cannot simply be listed as an “employee” for the sole purpose of meeting group requirements.

Documentation carriers may require:

• Business tax ID (EIN)
• Articles of incorporation or organization
• Proof both spouses actively work in the business
• Business bank account statements

2. Participation & Contribution Standards
Even for a two-person group, you’ll need to meet Texas official requirements:

• ✅ At least 75% of eligible employees must enroll (if it’s just the two of you, both must participate)
• ✅ Employer must contribute at least 50% of employee-only premiums

Source: Texas Administrative Code § 26.521

3. Small Employer Definition
Texas defines small employer plans as those for employers with 50 or fewer employees. According to the Texas Department of Insurance:

• Premiums are mostly based on the age of employees
• Rates don’t vary based on health status
• Plans must cover essential health benefits required by state and federal law
• Medical underwriting is prohibited for small group plans

Source: Texas Department of Insurance – Small Group Health Coverage

4. Carrier-Specific Attestation Requirements

Some Texas insurance carriers require Small Employer Attestation forms for groups of five or fewer enrolled members. This documentation must typically be submitted within 48 hours of application, or the application may be withdrawn.

What the attestation verifies:

• You operate a bona fide business
• Both spouses are legitimate employees or owners
• The group isn’t being formed solely to obtain health insurance
• You meet minimum participation requirements

5. Group Health Plan Enrollment Periods
Unlike individual plans, small group health insurance in Texas typically has more flexible enrollment:

Initial waiting period: Employers can impose up to 90-day waiting period for new employees

New businesses: Can enroll anytime within first 60 days of establishing eligible group

Annual enrollment: Usually coincides with policy renewal date (can be any month)

Special enrollment periods: Triggered by qualifying life events (marriage, birth, loss of other coverage)

Alternative Path: ICHRA for Maximum Flexibility

If you don’t qualify for a traditional two-person group—or if premiums are too high—Individual Coverage Health Reimbursement Arrangements (ICHRA) offer a powerful, tax-advantaged alternative officially recognized under federal law.

💰 INTERACTIVE CALCULATOR: Will Group Coverage Save You Money?

Use our 60-second calculator to compare your current premium vs. group plan + ICHRA options for Texas businesses.

How ICHRA Works for Couples:

1. You (the employer) set a monthly reimbursement amount—say, $500/month per person
2. Your spouse shops for an individual plan that fits their specific needs (doctors, medications, deductible preferences)
3. You reimburse them tax-free for premiums and eligible medical expenses up to your defined limit

Source: HealthCare.gov – Individual Coverage HRAs

ICHRA vs. Traditional Group: Head-to-Head Comparison

Feature	Texas 2-Person Group	ICHRA
Minimum participation	75% (both must enroll)	None (works for just 1 employee)
Employer contribution	50% minimum	You set the amount (no minimum)
Plan choice	One plan for both	Each person picks their own
Premium variability	Age-rated (5:1 max ratio)	Based on individual market rates
Tax treatment	Pre-tax premiums	Tax-free reimbursements
Flexibility	Annual changes only	Can adjust monthly allowance annually
Setup complexity	Moderate (carrier requirements)	Low (third-party administrator optional)
Compliance	ERISA, COBRA, state continuation	ERISA, some federal rules

When ICHRA Makes More Sense:

✅ Age gap between spouses – If one spouse is significantly older, individual market may offer better rates for the younger spouse
✅ Different health needs – One spouse needs robust coverage; the other prefers high-deductible plan
✅ Can’t meet 75% participation – Planning to hire employees soon but not yet
✅ Cost control – You want to set a fixed monthly budget regardless of premium increases
✅ Geographic flexibility – Spouses work in different cities/states with different provider networks

Texas-specific note: ICHRA adoption is growing rapidly among Texas small businesses in tech, consulting, construction, and oil/gas sectors where owners want cost predictability and employee autonomy.

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Tax Credits: Official IRS Guidelines for Small Group Coverage

Small businesses offering group health coverage may qualify for the Small Business Health Care Tax Credit under official IRS rules. This can significantly reduce your net insurance costs.

IRS Eligibility Requirements:

To qualify for the credit, you must meet ALL of the following:

✅ Fewer than 25 full-time equivalent employees
✅ Pay average wages of less than $62,000/year (2023 inflation-adjusted amount; updated annually)
✅ Pay at least 50% of employee-only premium costs
✅ Offer coverage through a qualified plan (most small group plans qualify)

Credit Amount:

• Maximum 50% of premiums paid for small business employers
• Maximum 35% of premiums paid for tax-exempt employers
• Available for two consecutive taxable years
• Sliding scale: Smaller employers and lower wages = higher credit percentage

How the Credit Works:

The credit operates on a sliding scale—the smaller the employer and the lower the average wages, the bigger the credit.

Maximum credit applies when:

• 10 or fewer FTEs
• Average annual wages of $29,600 or less (2023 adjusted amount)

Credit phases out as:

• FTE count increases from 10 to 25
• Average wages increase from $29,600 to $62,000

How to claim: File IRS Form 8941 (Credit for Small Employer Health Insurance Premiums) with your business tax return.

Additional tax benefit: Even after claiming the credit, you can still deduct remaining premiums as a business expense—giving you both a credit AND a deduction for different portions of the premium.

Source: IRS Small Business Health Care Tax Credit

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Understanding the Tax Benefits: Group Coverage vs. Individual Plans

One major advantage of group coverage for business owners is the tax treatment. Here’s how it works:

Group Health Plan Tax Benefits:

For the Employer (Business):

• 100% of employer premium contributions are tax-deductible as a business expense
• Reduces business taxable income dollar-for-dollar
• No payroll tax (FICA) on employer-paid health insurance premiums

For the Employee (Spouse):

• Employee share of premium deducted pre-tax from wages (via Section 125 cafeteria plan)
• Reduces both income tax and FICA taxes on employee wages
• More tax-efficient than paying for individual coverage with after-tax dollars

Tax Savings Example:

Scenario: Husband-wife S-Corp, both drawing $60,000 salary

Group plan premium: $1,200/month ($14,400/year)
Employer pays: $800/month ($9,600/year)
Employee pays: $400/month ($4,800/year)

Tax savings:

• Employer contribution: $9,600 × 24% (combined federal + state rate) = $2,304 saved
• Employee contribution (pre-tax via Section 125): $4,800 × 31.65% (24% income + 7.65% FICA) = $1,519 saved
• Total annual tax savings: $3,823

Compare this to purchasing individual coverage with after-tax dollars (no tax benefit except possible self-employed health insurance deduction, which is less advantageous).

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5 Action Steps: How to Get Started

Step 1: Verify Texas Eligibility

Contact a Texas-licensed broker to confirm whether your business structure meets the 75% participation and 50% contribution requirements.

Bring:

• Business tax ID (EIN)
• Proof of active business operations (tax returns, business license)
• Current individual plan details and premium costs for comparison
• Employee census (even if just 2 people—names, DOB, zip code, tobacco use)

Step 2: Gather Required Documentation

Prepare the attestation and verification documents carriers will require:

• Articles of incorporation/organization
• Operating agreement or partnership agreement
• Last 2 years of business tax returns
• Proof both spouses draw wages or distributions
• Current business bank account statements (showing active operations)

Step 3: Compare Group vs. Individual vs. ICHRA

Run a side-by-side cost analysis.

Include:

• Monthly premiums (gross and net of tax savings)
• Deductibles and out-of-pocket maximums
• Provider networks (confirm your doctors are in-network)
• Prescription drug formularies
• Payroll tax implications
• IRS tax credit eligibility

Step 4: Review Plan Renewal Dates

Unlike individual plans with calendar-year coverage, small group plans can have any effective date. Consider:

• Immediate need: Start group plan as soon as approved (typically 1st of next month)
• Strategic timing: Align with your fiscal year or current plan renewal
• Tax planning: Start in Q4 to maximize first-year tax deduction and credit

Step 5: Implement Section 125 Plan (If Choosing Group)

To maximize tax savings, establish a Section 125 Cafeteria Plan document. This allows:

• Pre-tax premium deductions from employee wages
• Potential FSA or HSA contributions (if using qualifying high-deductible plan)
• Dependent care assistance programs

Cost: Many carriers or third-party administrators offer template Section 125 documents for $100-500/year.

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Common Texas Carrier Requirements for 2-Person Groups

Different insurance carriers in Texas have varying requirements for very small groups. Here’s what to expect:

Blue Cross Blue Shield of Texas:

• Small Employer Attestation required for ≤5 enrolled
• Both spouses must be W-2 employees or documented owners
• Proof of business operations (tax returns, business license)
• 48-hour documentation window

UnitedHealthcare:

• Allows owner + spouse configurations
• Requires operating agreement showing both as active participants
• May require personal guarantee for groups <3 enrolled
• Monthly minimum premium thresholds may apply

Aetna:

• Minimum earned income requirements ($25,000+ per owner/employee)
• Business must be established for 90+ days
• Both participants must work 30+ hours/week in the business

Humana:

• Accepts 2-person groups in select Texas markets
• Requires proof of business legitimacy
• May have higher premium minimums for very small groups

Key takeaway: Not all carriers offer 2-person group options in Texas. Working with a multi-carrier broker ensures you see all available options and carrier-specific requirements.

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When to Skip Group Coverage and Choose Individual Plans

Two-person group coverage isn’t always the right answer. Consider sticking with individual/family plans if:

❌ One spouse has pre-existing conditions requiring specific specialists – Individual plans may have better network access
❌ Large age gap – Individual plan age rating may be more favorable
❌ One spouse nearing Medicare – Doesn’t make sense to start group coverage if one person enrolls in Medicare within 12 months
❌ Business is seasonal or unstable – Group coverage typically requires 12-month commitment
❌ Can’t meet attestation requirements – If business is very new or lacks sufficient documentation

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When ICHRA Is the Better Alternative

Individual Coverage Health Reimbursement Arrangements may be your best option if:

✅ You can’t meet the 75% participation requirement (planning to hire but not yet staffed)
✅ You want each spouse to choose their own plan (different doctors, different networks)
✅ You want budget predictability (set reimbursement amount, employees manage their own premiums)
✅ One spouse is significantly older/younger (individual market rates may be more favorable)
✅ You’re growing and want scalability (ICHRA works for 1 employee or 100+)

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Bottom Line

Yes, married couples can access group health insurance in Texas—but it requires meeting official state requirements of 75% participation and 50% employer contribution, plus carrier-specific attestation.

The decision tree looks like this:

If you qualify for group AND it’s cost-effective → Group coverage offers tax advantages, potentially better networks, and employer-sponsored benefits

If you can’t meet group requirements OR group is too expensive → ICHRA offers flexibility and tax benefits without participation rules

If neither makes sense → Individual/family plans remain available through direct carrier purchase

Don’t assume one path is automatically better. The right answer depends on your specific ages, health needs, income, business structure, and long-term plans.

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Ready to Explore Your Options?

Call Simple Start Insurance at (786) 292-0180 or email support@simplestartinsurance.com.

We’ll run a personalized comparison using:

• Official Texas carrier quotes for 2-person group
• ICHRA cost modeling
• Individual plan alternatives
• Tax credit calculations (IRS Form 8941)
• Payroll tax impact analysis

Prefer to text? Send “TXGROUP” to (786) 292-0180 for an instant calendar link.

Timeline: Most Texas group health quotes are delivered within 48-72 hours. Approval and effective dates typically 15-30 days from application.

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Additional Resources

• Understanding ICHRA for Texas Businesses
• Small Business Health Tax Credits 2025 Calculator
• Texas Small Group Participation Rules
• Section 125 Cafeteria Plan Setup Guide

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About the Author

Andrew Harris is a licensed multi-state insurance broker specializing in Medicare and group health coverage for small businesses. Licensed in Texas, Illinois, Florida, and 20+ states, Andrew helps families and businesses navigate complex insurance regulations using official IRS and state insurance department guidelines.

Disclaimer: Simple Start Insurance represents multiple insurance carriers, not all companies or plans available in your area. Always verify current regulations with the Texas Department of Insurance and consult a tax professional regarding IRS tax credit eligibility.