About the Experts
John Komadina is the VP of Sales at EssentL PEO with nearly a decade of experience in the PEO industry. He has spent his career helping small business owners understand their benefits options and find the right fit for their team.
Crystal Jackson is the co-founder and CTO of EssentL. A former engineer at Intel who later ran multiple small businesses, she experienced the small business health benefits crisis firsthand and built EssentL to solve it.
Christopher Jackson is the CEO and co-founder of EssentL. A physicist by education and engineer by training, he has co-founded multiple technology companies and brings a data-driven perspective to why the PEO model is the most efficient solution for small businesses.
If you have fewer than 50 employees, looking out at the sea of health benefits options can feel completely overwhelming. There are group plans, HRAs, PEOs, health shares, SHOP marketplaces, and more, each with its own rules, costs, and tradeoffs.
I’ve spent nearly a decade in this industry helping small business owners cut through that noise. What I’ve found is that most people aren’t making a bad choice they just don’t have the full picture yet. So, I sat down with EssentL’s co-founders, Crystal and Chris Jackson, to get to the bottom of what actually works for small businesses in 2026, why the open market fails so many owners, and what the real numbers look like.
Do Small Businesses Actually Have to Offer Health Benefits?
If you have fewer than 50 full-time equivalent employees, federal law does not require you to offer health benefits. There is no penalty under the Affordable Care Act.
But “not required” and “not worth it” are two very different things. Here’s why small businesses offer coverage even when they don’t have to:
Recruiting and retention. Health benefits consistently rank as the benefit employees care about most ahead of salary, retirement plans, and remote work flexibility. If two job offers are otherwise equal and one includes coverage, the candidate takes that offer nearly every time, especially experienced hires with families.
Tax advantages. Employer contributions to health benefit premiums are generally 100% tax-deductible. Set up a Section 125 cafeteria plan and employee contributions come out pre-tax too, saving both sides on payroll taxes.
Team stability. When employees have to find their own coverage on the individual market, they’re one bad renewal away from leaving for a company that offers group coverage. Benefits remove that pressure.
Your own coverage. If you’re the owner and you want quality coverage for yourself and your family, a group plan through a PEO is almost always cheaper and significantly better than what you’ll find on the open market.
Why the Open Market Fails Small Businesses
Before we get into the four options, it’s worth understanding why so many small business owners end up overpaying or going without, and it starts with how health benefits are priced.
John: Crystal, you started EssentL because of your own experience with the open market. What was that like?
Crystal: It was genuinely outrageous. On the open market, we were paying $4,000 a month for a mediocre plan with an $8,000 deductible and 40% coinsurance on top of that. I went to the emergency room once and came out with a $10,000 bill on top of the $4,000 a month I was already paying. I’m like, what did I pay $48,000 a year for? It covered nothing. Nothing. I get it because I’ve been in Corporate America. I knew what good benefits looked like from my time at Intel. I just couldn’t figure out why there was no good option for a small business owner.
John: Chris, you went looking for a solution. What did you find?
Chris: We asked the same question everyone asks: are we just looking in the wrong place? Could a broker find us a small business policy? You can get one, but you get basically the open market equivalent for a company of five or ten or twenty people. The numbers are too small to spread the risk. That’s the core problem, a national carrier insuring 10,000 people can lower everyone’s premium because 9,000 of those people are healthy. When they insure a company of five? They can’t spread the risk. So to cover themselves, the actuaries go in the back room and increase that premium. That’s why the price is what it is. It’s not arbitrary. It’s pure statistics. And that’s exactly what a PEO solves because it pools everyone together so the math finally works in your favor.
This is the mechanic that makes the open market so painful for small businesses. On the open market, because of the Affordable Care Act, carriers can’t ask about your health history or pre-existing conditions. So they assume everyone is at high risk. You pay for it accordingly whether you’re healthy or not.
The good news is there are four paths forward. Most small businesses land on one of them, and the right choice depends on your team size, budget, and how much administrative complexity you want to take on.
The Four Most Common Health Benefits Options for Small Businesses
John: Crystal, can you walk us through the four main options?
Crystal: There are actually a lot of ways to offer health benefits such as QSEHRAs, ICHRAs, level-funded plans, association health plans, SHOP marketplace, health share programs, and more. Each has its place. But in practice, most small businesses land on one of four approaches: a traditional small group plan, a Health Reimbursement Arrangement, a traditional PEO, or EssentL.
Option 1: Traditional Small Group Health Benefits Plan
This is the most familiar model. You purchase a health benefits policy from a carrier — Blue Cross Blue Shield, UnitedHealthcare, Aetna, Kaiser, Cigna, or a regional insurer — that covers all eligible employees under one plan.
How it works: You choose a plan (or a few options) and decide how much of the premium the business will cover. Most carriers require employers to cover at least 50% of the employee-only premium. Employees cover the rest through payroll deductions.
What it costs: The average annual premium runs roughly $9,000 to $10,000 for individual coverage and $25,000 to $27,000 for family coverage. At the 50% minimum, you’re looking at approximately $375 to $415 per employee per month out of pocket. For 2026, small group premiums are projected to increase by roughly 10% to 13% over last year.
Who it’s best for: Businesses with 10 to 50 employees who want a straightforward, recognizable benefit that employees already understand.
The catch: Premiums are based on your group’s demographics and location. Small groups under 10 have less negotiating power. A single high-cost employee can impact your renewal. And those annual rate increases are unpredictable.
Option 2: HRAs — Reimbursement Instead of a Group Plan
Health Reimbursement Arrangements have become one of the fastest-growing alternatives to traditional group coverage. Instead of buying a group plan, you set a monthly reimbursement budget and employees use it to purchase their own individual coverage.
There are two main types:
QSEHRA (for businesses with fewer than 50 employees that don’t offer a group plan): You set a monthly allowance, employees buy their own coverage, and you reimburse them tax-free up to your limit. For 2026, the IRS maximum is $6,450/year for self-only coverage and $13,100/year for family coverage.
ICHRA (available to any size business, no cap on reimbursement): You can vary the allowance by employee class such as full-time vs. part-time, by location, and more. Especially useful if you have employees across multiple states.
What it costs: You control the budget entirely. You decide the monthly allowance, and that’s your maximum cost. No renewal surprises. No mid-year premium hikes.
Who it’s best for: Businesses that want completely predictable costs, or businesses with employees spread across multiple states.
The catch: Employees have to do more of the work like shopping for and purchasing their own plan, then submitting for reimbursement. For employees used to employer-sponsored coverage, this transition can feel unfamiliar.
Option 3: Traditional PEO
A PEO — Professional Employer Organization — pools your employees together with employees from hundreds or thousands of other small businesses, creating a single large group. That large group gets access to health benefits at rates no individual small business could negotiate on its own.
How it works: You partner with a PEO, your employees are enrolled in the PEO’s master benefits plan, and the PEO also handles benefits administration, payroll, and HR compliance. You get access to group rates that reflect the PEO’s total membership — not just your team.
What it costs: PEO fees typically run $100 to $250 per employee per month, covering payroll, benefits administration, HR compliance, and workers’ comp in addition to benefits access. Premiums through a PEO are often 20% to 40% lower than what you’d pay on a small group plan. According to NAPEO, businesses using a PEO see an average 27% return on investment once you account for everything it replaces.
Who it’s best for: Businesses with 10 to 50 employees who want a comprehensive solution — not just benefits, but payroll, HR compliance, and benefits administration in one package.
The catch: Traditional PEOs generally require a minimum of 5 to 10 employees to get started. Some of the larger ones won’t realistically serve you until you have 25 or more. They’re also not built for lean, modern teams — the pricing, platforms, and benefits packages are designed for the average company, not a small or remote one.
John: Chris, can you explain why traditional PEOs won’t serve smaller businesses?
Chris: It’s simple economics. All other PEOs are set up from the foundation to win larger companies. A salesperson commissioned on company size isn’t going after a five-person team because he wants the 100-person company with that big commission check. Even if the PEO’s rules say they’ll take five people, they’ll saddle you with a premium like an extra $14,000 or $15,000 a year just to make it worth their while to service a small account. So they’re not really serving you. They’re just tolerating you at a very high cost.
Option 4: EssentL PEO (Built for Lean, Modern Teams)
Something significant has changed in how businesses are built today. More people are leaving corporations to launch their own companies, build agencies, or run lean operations with small, AI-powered teams. Traditional PEOs weren’t designed for this. They were built for a world where headcount was the measure of output. That world is gone.
John: Crystal and Chris, can you walk us through what EssentL actually costs compared to the open market?
Crystal: So on the open market, we were paying $4,000 a month with an $8,000 deductible and 40% coinsurance. Through EssentL, that dropped to about $2,000 a month. Our deductible went from $8,000 to $1,000. A copay that used to be $60 before is now $20. Our coinsurance went from 40% down to 20%. Everything was better, the benefits were cheaper, and the coverage was like what we had at Intel. Corporate benefits at a corporate price. That was the whole point.
Chris: Exactly, and another key point to stress is that the coverage is 90% greater. It’s not a small difference. It’s a completely different category of coverage at half the price.
EssentL was built for the way companies actually operate now. Below I will outline how EssentL works, what it costs, and who the best candidates are.
How it works: EssentL is a modern PEO designed specifically for small, high-efficiency teams. Like a traditional PEO, it gives you access to group health benefits rates, payroll, HR compliance, and workers’ comp all in one platform. The difference is that EssentL was built from the ground up for lean teams, starting at a minimum of just one employee, without the overhead or minimums that traditional PEOs require.
What it costs: EssentL charges $150 per employee per month. That opens up access to HR compliance, workers’ comp, benefits, and everything else. Most businesses find it cost-neutral or better once you account for everything it replaces. Per NAPEO research, PEO users see an average 27% ROI. EssentL extends those economics to businesses that traditional PEOs have historically turned away.
Who it’s best for: Founders, creators, and small business owners with teams of 1 to 25+ employees who want a full HR and benefits solution without the overhead or minimums of a traditional PEO.
The distinction that matters: traditional PEOs often require a minimum of 5 to 10 employees. EssentL starts at one. For the growing segment of small businesses that are intentionally small — not because they haven’t scaled, but because they don’t need to — EssentL was built for the way small businesses operate in the modern world.
Beyond Health Benefits: What EssentL Actually Covers
Health benefits get most of the attention, but a PEO does a lot more. For small business owners who are running payroll, managing compliance, and handling HR questions on top of everything else, those other pieces matter just as much.
John: Crystal, what else does EssentL handle beyond health benefits?
Crystal: Because we’re a PEO by law, we have to run payroll that’s part of the IRS and ERISA structure that makes the whole model work. So we handle payroll, federal and state taxes, Social Security, FICA, all of it. We also have an HR expert. In California, for example, if you hire someone and you don’t give them an employee handbook that covers everything California law requires, you can get fined. We cover that for every state we operate in, currently 15 states, and if you have a remote employee somewhere we’re not yet registered, we can get set up there within a matter of weeks. We also handle workers’ comp, which a lot of small business owners don’t realize is required for any employee in California even if the company is headquartered elsewhere. And we have supplemental benefits through MetLife for vision, dental, and accident hospitalization, travel benefits through Chubb, and 401(k) plans even for solo entrepreneurs.
John: Chris, how do you explain the full value of that package to a small business owner who’s used to doing it all themselves?
Chris: I tell them how corporations are run a certain way for a reason with an HR department that handles benefits, payroll, and all the administrative work of employing someone. It’s not just because they have to, but it’s because it’s the most efficient way to operate. If you’re going to be in business and you’re going to grow, these structures help you. They protect you. If you get sued and you’re incorporated, your personal assets are protected. If an employee gets hurt, workers’ comp means they’re covered and you’re not getting sued directly. All of these things came about over the evolution of American business because they work. A small business owner can try to navigate all of that alone, or they can just offload it to us and focus on why they got into business in the first place.
The EssentL Concierge Service: One More Thing Worth Knowing
One differentiator that doesn’t get enough attention is EssentL’s concierge service, and it’s one of the things Crystal is most proud of.
John: Crystal, can you explain how the concierge service works?
Crystal: I’m a mother, and I know the frustration of calling an insurance company and sitting on hold for two hours trying to figure out why a bill didn’t get paid correctly. We wanted to make sure that was taken care of for our clients. So we have a concierge service where you can call and say, this bill didn’t get paid properly, can you get on the phone with the benefits carrier and figure out why? Or that I’m trying to figure out what my deductible is going to be on a procedure, or whether I should change medications, or if there’s a cheaper way to get a prescription. They’ll investigate it and call you back. For a small business owner, I mean, I don’t want to sit on hold with an AI chatbot pressing zero over and over. That’s not a good use of anyone’s time. Being able to offload that to someone who will actually handle it for you, that’s a real thing.
Side-by-Side Comparison
| Small Group Plan | ICHRA / QSEHRA | Traditional PEO | EssentL PEO | |
| Min. employees | 1–2 (varies by state) | 1 | 5–10 (typical) | 1 |
| Employer cost control | Low (carrier sets price) | High (you set the cap) | Medium-High | High |
| Employee experience | Familiar, simple | Employee shops own plan | Same as group plan | Same as group plan |
| Admin burden | Medium | Low-Medium | Low (PEO handles it) | Low (PEO handles it) |
| Includes payroll/HR | No | No | Yes | Yes |
| Built for teams under 5 | No | Yes | No | Yes |
| Concierge benefits support | No | No | Rarely | Yes |
| Best for | 10–50 employees, simple needs | Any size, budget-focused or multi-state | 10–50 employees, want full HR solution | 1–25 employees, lean modern teams |
Steps to Get Started
- Decide your budget. What can you realistically afford per employee per month? Even a rough number helps narrow the field significantly.
- Consider your team size and trajectory. Are you intentionally staying lean, or do you expect to grow? The right solution today should still work for you in 12 to 18 months.
- Talk to a broker or PEO. A licensed health benefits broker costs you nothing — they’re compensated by the carrier — and can run quotes across multiple options. If you’re leaning toward a PEO, talk to a few, including EssentL, to compare what’s actually included.
- Evaluate your total HR burden. If you’re also managing payroll, compliance, and workers’ comp yourself, a PEO may solve multiple problems at once — not just the benefits problem.
- Set an enrollment timeline. Plan for at least 30 to 60 days of lead time before coverage begins, including an open enrollment window of 2 to 4 weeks for employees to sign up.
- Communicate clearly with your team. Explain your benefits in plain language. A 15-minute walkthrough goes a long way.
The options available to small businesses today are genuinely better than they’ve ever been. But cutting through the noise to find the right one and understanding what you’re actually comparing takes time that most business owners don’t have.
That’s exactly the kind of conversation I have every day. If you have a team of 1 to 25 people and you want to see what the real numbers look like for your specific situation, reach out to me directly at EssentL. No jargon, no pressure. Just an honest look at what’s possible.
And if you’ve been through this process yourself and found something that worked, or something that absolutely didn’t, drop it in the comments. This space is evolving fast, and there’s no single right answer for every business. I’d genuinely love to hear what you’re experiencing out there.