The short version
- Washington small-group coverage requires at least one common-law employee enrolled, usually someone on W-2 payroll.
- Owners count only as employees of their own business, which in practice means a corporation that pays them wages.
- A spouse on payroll is the gray area: some carriers accept it for a corporation and some do not.
- Groups of one or two send tax and payroll proof, and some carriers want it 60 days before the start date.
Question 1: How does the business file its taxes?
Carriers start here because your return shows whether the owner can be an employee at all.
| Return you file | Can the owner be the qualifying employee? |
|---|---|
| Form 1040 with Schedule C (sole proprietor or single-member LLC) | No. A sole proprietor is self-employed, not an employee. |
| Form 1065 (partnership or multi-member LLC) | Usually no. Partners are not employees of their partnership, though federal rules let a plan cover bona fide working partners alongside employees. |
| Form 1120-S (S corporation) | Often yes, when the owner works in the business and is paid wages on a W-2. |
| Form 1120 (C corporation) | Often yes, when the owner is an officer on W-2 payroll. |
The IRS treats a corporate officer who performs services as an employee and the officer's pay as wages. The U.S. Department of Labor's rule points the other way for unincorporated owners: a plan with no employees as participants is not an employee benefit plan. Source: IRS. Source: 29 CFR 2510.3-3.
Question 2: Is anyone on W-2 payroll who is not an owner or spouse?
If yes, you have a standard small group, and the remaining questions are about contribution, participation and timing. Washington defines a small employer as one that averaged at least one and no more than 50 employees last year, employed at least one on the first day of the plan year and has a bona fide employer-employee relationship. Source: RCW 48.43.005.
If no, keep reading. In 2015 the Washington Office of the Insurance Commissioner told carriers that buying group coverage requires at least one common-law employee, and that this requirement overrides older state language allowing self-employed "groups of one." Kaiser Permanente repeats that notice in its 2026 Washington underwriting guidelines. Source: Kaiser Permanente.
Question 3: Is your spouse the only other person on payroll?
This is where most of this week's calls landed, and it is the hardest case to predict. Federal rules say an individual and spouse are not employees of a business they wholly own, incorporated or not. A spouse's W-2 alone may therefore not create an eligible group.
Carriers apply that rule differently. Some accept a corporation where the owner and spouse are both on W-2 payroll. Others decline when the business is unincorporated, even with the spouse paid wages and unemployment tax. Premera's 2027 attestation counts owners, officers and partners "only if they are common-law employees" and tells employers to consult counsel on who qualifies. Source: Premera form 062430.
Two practical rules follow. Do not add a spouse to payroll only to qualify. And if one carrier accepted your group, confirm the next carrier's position before you switch.
Question 4: Can you meet the paperwork deadline for your start date?
Groups of one or two prove eligibility with documents, and the clock starts earlier than most owners expect.
- Premera: groups with fewer than three subscribers send a signed Group Size Attestation, the Washington quarterly wage report (Form 5208A and 5208B) or payroll, and owner tax returns 60 days before the effective date. For a February 1, 2027 start, that is December 3, 2026.
- Regence: completed forms are due by the 15th of the month before the effective date. Groups enrolling one or two active employees add wage reports and owner tax documents, plus IRS Form 2553 or 8832 if the business changed from a sole proprietorship since its last filing.
- Kaiser Permanente: new-group materials are due by the 20th of the month before, and new groups of five or fewer send the quarterly wage report and employer tax documents.
Budget for the smallest-group rules
Passing the eligibility test does not mean the plan fits your budget. The smallest groups carry the strictest terms.
- Premera's 2027 small-group application requires groups of one to three to pay 100% of the employee's premium, with 100% participation. Source: Premera form 012121.
- Kaiser's 2026 guidelines require at least a 50% employer contribution and 50% participation for groups of one to three.
- Washington small-group rates can vary only by area, family size, age and wellness activities, so each enrolled person is priced on those factors. Source: RCW 48.21.045.
- Level-funded carriers we work with start at two enrolled employees, so level funding does not solve a true group of one.
One timing note: Kaiser's guidelines describe an annual window. A completed application received between November 15 and December 15 is accepted even if the group misses participation or contribution minimums.
If you are weighing an S corporation election
Electing S corporation status can make an owner eligible, but it is a tax decision first. Bring these points to your CPA:
- Working shareholders are expected to take reasonable compensation as W-2 wages.
- For a more-than-2% shareholder-employee, premiums the S corporation pays go in W-2 Box 1 but are not subject to Social Security or Medicare tax, and the owner may qualify for the self-employed health insurance deduction. Source: IRS.
- Carriers verify a new election with the IRS paperwork. An election that starts January 1 may not support a group plan on that same date.
If you do not pass the test this year
Price individual coverage. Washington Healthplanfinder's open enrollment for 2027 runs November 1, 2026 to January 15, 2027, and you must enroll by December 31 for a January 1 start. Federal tax credits and Cascade Care Savings are available only through Healthplanfinder, so check your household estimate before you look off-exchange. Self-employed owners may deduct premiums using IRS Form 7206.
When you hire your first W-2 employee who is not a spouse, revisit the question. At that point a small-group plan or an ICHRA becomes possible.
Get a straight answer before you change anything
Send Benefit Experts your business's tax filing type, who is on payroll and the start date you want. We will tell you which carriers can accept the group, what they will ask for and the date it is due, before you change payroll or your tax election. See our group health page for the plans we compare.
Call 206.556.2993 or request a benefits review.
Common employer benefits questions
Can a sole proprietor with no employees buy a group health plan in Washington?
No. Washington small-group coverage requires at least one common-law employee, and a sole proprietor is self-employed. Look at individual coverage through Washington Healthplanfinder or directly from a carrier.
Can an S corporation with only the owner on payroll get group coverage?
Often, yes. Carriers usually accept an S corporation owner who works in the business and is paid W-2 wages, with Form 1120-S, K-1s for all owners and payroll records as proof.
Does a spouse on payroll count as the employee?
It depends on the carrier and the business structure. Federal rules say an owner and spouse are not employees of a business they wholly own, so some carriers decline these groups and others accept them for corporations. Confirm before changing payroll.
When are documents due for a group of one or two?
Premera wants them 60 days before the effective date. Regence wants completed forms by the 15th of the month before, and Kaiser by the 20th of the month before for new groups.
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