3. Consider health savings accounts. Health savings accounts are an increasingly popular option for owners of small businesses. These tax-exempt accounts, which are used to pay for certain medical expenses, could reduce your small business health insurance costs while giving your employees tax breaks.

You must have a high-deductible health insurance plan to establish a health savings account. For example, in 2007 the minimum deduction for individuals is $1,100; for families, it is $2,200. That means that you or your employees would have to pay $1,100 out of your own pockets for health care expenses such as doctors' visits or prescriptions before you are reimbursed by the insurance company.

But there are benefits: In 2007, employers, workers, and their families can contribute tax-free up to $2,850 for individual health savings accounts or $5,650 for family accounts. These funds can only be used to cover health care costs, and employees can take their accounts with them if they leave. The funds generally do not expire.

Contributions and withdrawals are both tax-free, and individuals can claim tax deductions on their 1040 forms – meaning employees don't need to itemize to get the tax break. Employer contributions are also tax-deductible for business owners but are not required. Individuals can also set up health savings accounts.

To establish or participate in a health savings account, your only comprehensive health insurance can be the high-deductible health insurance plan and they must be offered to all employees.

Health savings accounts benefit healthy employees who do not regularly see doctors. You or your employees can, however, have health insurance that specifically covers ailments, including certain diseases or illnesses, accidents, dental and vision care.

4. Join a group. Small group health insurance plans cover between two and 50 employees, although there are "group of one" insurance plans for the self-employed that offer similar benefits.

The larger your group, the lower your premiums will be. According to the America's Health Insurance Plans 2006 survey, 80 percent of small groups polled had 10 or fewer employees in their health insurance plans, and the average monthly premiums for individuals was $330. Firms with between 26 and 50 employees paid $287 a month for single premiums.

If your business has fewer than 10 employees, you can still partner with other businesses or individuals and expand your group plan. Note that health care laws are governed by the states, so you'll want to partner with people in your state.

5. Shop around. Health insurance is a huge business, so shopping around for different providers could reduce your small business health insurance costs. Start by searching the Internet and also ask other owners of small businesses what they pay for health insurance. Insurance agents will charge fees, but you'll save time and they can investigate health insurance plans for you. The National Federation of Independent Businesses partnered with eHealthInsurance, a national health insurance agency that gives you several quotes online.

Tiare Rath is a freelance journalist and a former personal finance columnist for MarketWatch.com