Any employer with at least one common law W-2 employee is eligible to purchase a group health insurance plan.  If you choose to purchase such a plan, you must cover eligible employees (those working at least 30 hours a week on average) and you may at your option cover employees who work between 20 to 29 hours a week on average.  You may share the cost of the plan with employees or cover the cost entirely.  In California the minimum waiting period for offering health insurance to new employees is 60 days. There are certain exceptions for temporary workers or variable hour employees.

Pros

Group health insurance premiums are tax deductible for the employer and unlike wages are not subject to FICA or Workers Compensation Taxes.  Employee contributions may be deducted from payroll pre-tax and are also not subject to FICA. This is essentially a discount on your health insurance that could range anywhere from 20% to 50%.

Certain small businesses may be eligible for a temporary tax credit in 2014 and 2015 if they offer group health insurance purchased through the SHOP (Covered California's small group insurance marketplace).

Some employees, especially more highly compensated employees, expect health benefits.  For businesses that rely on scarce human resources a robust compensation package including health benefits is critical to retention.

Cons

The expense associated with group health insurance has grown significantly over time.  For those businesses offering health benefits, this amounts to a built in wage increase for employees, but employees seldom see this as a raise.  Although the growth in cost has slowed in recent years, it remains an unknown risk for businesses.