Better Business for Small Business Leaders
Better Business for Small Business is the go-to podcast for entrepreneurs looking to get 1% better in their business every day. Hosted by Chrissy Myers, CEO of AUI and Clarity HR, each episode dives into real-world stories and expert insights from resilient small business owners who blend passion, purpose, and philanthropy to drive success.
Better Business for Small Business Leaders
Alice Rhodes Shares How to Replace a Group Plan Without Leaving Your Team Behind
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Your health insurance renewal hits, and suddenly the math doesn’t work: premiums climb faster than inflation, one big claim can blow up a small group plan, and specialty drug costs keep stacking the deck against predictability. We talk through why this trend is not a quick blip and why more business owners are getting cornered into hard choices that can even block raises. If you’ve ever thought, “Our benefits cost is becoming unsustainable,” you’re not the only one.
Alice Rhodes and I walk through what it really means to deconstruct your benefits and rebuild a plan that actually fits the business you’re running today. That includes the three common paths we see when a traditional group health plan stops making sense: eliminating coverage, providing a healthcare stipend (simple, but taxable), or shifting to an Individual Coverage HRA (ICRA), where employees choose their own individual plans and the employer reimburses a defined amount in a tax-advantaged way. We also get real about the employee experience on individual plans, including narrow networks, doctor and hospital differences between group and individual products, and why hands-on guidance can be the difference between a smooth transition and a frustrated team.
We also cover the “gotchas” leaders need to know, like COBRA obligations with ICRAs, how ACA rules treat different approaches, when ICRA admin fees can erase savings for very small employers, and how voluntary benefits like dental, vision, disability, accident, and critical illness can add value when medical coverage changes. If you want more predictable costs without “feeding employees to the wolves,” this conversation gives you a clear framework for deciding what fits.
Subscribe for more practical benefit strategy conversations, share this with a business owner who is staring down a renewal, and leave a review if it helped. What’s the biggest question you have about ICRAs, stipends, or replacing a group plan?
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When Premiums Become Unaffordable
SPEAKER_00What happens when you can't afford your group premiums anymore for health insurance? We're going to talk about that today, so stay tuned. What happens when the traditional group plan isn't sustainable anymore? And the reality is that more and more businesses are finding themselves in this exact situation. Why are so many companies struggling to keep their benefit plans affordable? So let's start with the why first. What's going on?
SPEAKER_02So with inflation, the costs of medical insurance are outpacing inflation and they have for years. And it years ago, if you got a 20% increase or even a 10% increase, it was 10 or 20% of a smaller number.
SPEAKER_01Yeah.
SPEAKER_02Now that those numbers have gotten higher, that 10 to 20% is a big increase. Is it a temporary trend? I would like to say yes.
SPEAKER_01I know I would like to say that too.
SPEAKER_02I wish I could say that in reality, no. The cost of care and the cost of, while they are great problems to have, um, you know, years ago, if we had a a preemy, sadly to say, the premi didn't make it.
SPEAKER_01Didn't always make it.
SPEAKER_02Didn't always make it. So that claim was not as ugly as it is now. Now, while it's great that that baby is still here, but that could have been a$750 million claim. Yeah. So same thing with the medications that are out there now. That's where we've seen some huge increases. Drug costs have increased significantly. Yeah. Is they're they're great. You know, they're really expensive, but yeah.
Why Healthcare Costs Keep Rising
SPEAKER_00Yeah. So rising healthcare costs, which we don't anticipate ever going down anytime soon. Pharmacy and specialty drug costs kind of continue to build that claims volatility in small groups. So when you've got a small organization, when you have a significant claim, it can kind of cause wreak havoc within your organization. And then of course, you know, you've got carrier pricing models. And so certain things have to cost a certain thing. They can't go below what their their specific is around it. So let's talk about, you know, what it means to deconstruct your benefits. So, you know, when renewals get high, one option that business owners have is what we've kind of talked at at AUI, it's called deconstructing their benefits. What does that actually mean?
SPEAKER_02So there's a few different ways we've seen it happen. Um, one is they do what they call an ICRA, okay, which stands for individual coverage health reimbursement account.
SPEAKER_01Yes.
SPEAKER_02We speak in an in, you know, in anagrams now. So it's like ICRAs and what is that? Or we've seen them do stipends. Okay. Or we've seen them just scrap benefits altogether. Um in the small groups, I've seen more of we'll give you a stipend. And then you have to go to marketplace. And then you have to go to marketplace. Um, but that stipend that stipend is taxable. Yeah.
SPEAKER_00So for those that don't understand marketplace, we're talking about healthcare.gov, right? Exactly.
SPEAKER_02Okay. Yes. Yeah. Or you can also go outside of marketplace as well. But the plans are pretty, they're built on the same model. They look very similar. They're very similar. You still have your gold, silver, bronze.
SPEAKER_00And you said for a stipend they're taxable for the employees. Yes. Yes.
SPEAKER_02Whereas if we look at the ICRA model, they're not, but that requires some more administration on the group.
SPEAKER_00Okay. So when we talk about deconstruction, some of it is really about redesigning potentially what health insurance benefits for the employees look like. So they may no longer have a group plan, but they could have an individual plan. Right. They could have a stipend and they could have a choice of what they want in an individual plan. They could be on an ICRA where it's a little bit more managed. Okay. Yeah. So let's talk about the alternatives. So when a traditional group plan isn't financially sustainable anymore, we kind of touched on it in the last question. What are those options again that the business owners have? Because again, usually it takes people 10 times to hear something before it's a good idea or something they should consider. So we're going to probably say ICRA like 15 times. Yes. Um, what are some of those options that businesses have again? Let's go through them.
SPEAKER_02Um one is just scrap benefits altogether.
SPEAKER_00Completely eliminate it. We're not going to offer it. You're on your own.
SPEAKER_02Yes. Okay. Um, problem with that is you have a lot of lost employees now that still need coverage and don't know what to do, don't know who to go to, don't know what they have, don't know what their needs are.
SPEAKER_01Okay.
SPEAKER_02Um, number two would be we'll give you a stipend.
SPEAKER_01Okay.
SPEAKER_02Um, to help you pay for your coverage, but then that now becomes part of taxable income, but there's nothing on the employer side that they need to do other than give them the the money.
SPEAKER_00What's the range of stipend that you've seen in organizations?
SPEAKER_02Oh, I've seen it$200 a month, I've seen it five, I've seen it all the way up to a thousand. Wow, okay.
SPEAKER_00So there's a lot of range. Yes. Similar to what the contribution rate is for the employer?
SPEAKER_02Yes.
SPEAKER_00Okay.
SPEAKER_02Yes. But what they're doing is they're keeping it static. Okay. So I've got one company, it's$700. It's been$700 for five years.
SPEAKER_00Okay. And then what other option do you have? So we'll talk about ICRA for a second. No, it's okay.
SPEAKER_02Um ICRAs. So individual coverage, HRA. Okay. So that the employer gives you, and this is not taxable income, money to help pay for your insurance. Now, in this case, since the employer is paying for it, you can't get the subsidies on Marketplace or healthcare.gov. Um, but in order for you to get the money from your employer to pay for the premium, you've got to show you have it.
SPEAKER_01Okay.
SPEAKER_02Um, there's some now there's some platforms out there that kind of help the employer track it. Um, but again, some some of those have just turned into a go to this website.
SPEAKER_01Okay.
SPEAKER_02And some employees feel a little lost on it as well. So you want to make sure you have some somebody good guiding you.
SPEAKER_00Okay. So for those ICRA plans, how do the employees get their coverage? Do they go to a specific website? Do they talk to a broker? How can that work for them? How does it work? And how can it be employer friendly as well?
Deconstructing Benefits And Core Options
SPEAKER_02I've seen it all over the board. How do you do it right? Yeah. Where I like to do it, I had one company last year, but they didn't do an ICRA model. They are doing a healthcare stipend. I spent a solid week at that company meeting with employees one-on-one to figure out what would benefit them, what they needed. Did we have their doctors covered? Did were their medications covered? And then back the next, you know, two days later to okay, did you decide? Let's let's get you enrolled where you need to go. And then again, all these individual plans renew in January. So they're not on their own at renewal either.
SPEAKER_00So you're helping them figure out what the right plan is. Yep. Picking things, making sure. Because a lot of times on the the individual side within healthcare.gov, we also have more narrow networks. Yes. So making sure the doctors are included in their network is really important.
SPEAKER_02Especially, you know, while we're fortunate in Northeast Ohio that we've got eight different carriers, but none of them have the same network. Well, what do you mean? I have Sumacare group. I can go to Acker in General. No, you can't. Not in Sumacare individual. Not in Sumacare individual. Right. Yeah. So, or same thing, medical mutual. I can't go, I could always go here. I had medical mutual group. No, I'm sorry. It's different on individual. So you just need to make sure you understand. Or I called my doctor. They said they take medical mutual or they take Anthem or because they all have these smaller, yeah, smaller networks. The big thing here in Akron is Akron Children's. We've only got two that have it.
SPEAKER_00Wow. So picking the right plan is really important. Having someone who can navigate you through and shepherd your employees into the right type of plan can be key as well.
SPEAKER_02Yeah. Help narrow it down for them. So they're not so lost.
SPEAKER_00Yeah. So to come back to that ICRA model, what we see is that, you know, the employer provides that defined reimbursement amount. Employees purchase their own individual plans. And then that reimbursement is still tax advantaged. Yes. Uh, but in a greater cost control really for the employers. Correct. Correct. Can be a little bit of confusion though for employees. So helping them navigate is really important.
SPEAKER_02Because also offering that ICRA, it is still a group-based plan. Okay. So you still have to make sure you offer Cobra.
SPEAKER_00Ah.
SPEAKER_02Yes. So you still have some things that you need to do with that.
SPEAKER_00Let's talk about Cobra. So Cobra is when someone leaves the organization, it's offering them benefits.
SPEAKER_02Yes. Okay. Exactly. So if you've got more than 20 employees, it's still a group-based plan. You have to still offer Cobra. Now still it's an individual plan. Why anybody would take it? Who knows? But that requirement is still there.
SPEAKER_00And if you don't offer it, you have to administer it as such.
SPEAKER_02Okay. If you're, you know, under the Affordable Care Act, if you're an employer that has more than 50 employees, you have to offer coverage or you can be fined. Okay. That ICRA model does count as offering coverage. So there's no fine for doing it. Okay. Whereas if you just scrap benefits or do the stipend, it doesn't count as having group benefits. So there are situations where doing the ICRA makes more sense.
SPEAKER_00Do you find that more individuals participate in a group plan than they do on the ICRA plans?
SPEAKER_02From what I've seen, yes.
SPEAKER_00Okay. It's just simpler. They don't want to deal with it. Yeah. And I would say from an administration perspective and from an HR perspective, there is a very big difference to having one company meeting on this is your benefits, this is what it looks like, than individualized company meetings with whether it's a broker or it's the person in the HR department helping them figure out how to pick their plan. It can be much more labor intensive. Yes. So not every strategy works for every company. When does an ICRA make the most sense for someone in an organization?
SPEAKER_02If you've seen several years in a row of high increases, you know it's not going to get any better because you know you've got some pretty significant medical conditions, several people are in high cost meds. Um, those increases are just gonna continue to go up uncontrollably.
SPEAKER_01Yeah.
SPEAKER_02Whereas on the ICRA model, if you want to just give them$700 a month, you can give them$700 a month next year, too. And then they can pick the plan that suits their needs that will cover that$700, that$700 recover. Okay. Or they can then they can pay the difference as well. So if they pick a plan that's$800, they would pay the thousand. Or if they pick one that's six, you get to keep the the difference. You don't have to because it's just reimbursed.
SPEAKER_00Okay. What about like geography? Does it matter like if they have employees everywhere? Can they use an ICRA?
SPEAKER_02Yeah, they can still use an ICRA, or they can also use an ICRA for a Medic for Medicare as well.
SPEAKER_00Oh, okay. Um, what about if they only have a few employees? Does an ICRA make sense?
SPEAKER_02Does it depends because sometimes when you get in the administrative fees, those ICRs they they don't make as much sense because they're pretty costly to do that. Um some of them have minimums that they'll charge, you know,$3,600 a year for administration. Well, that just ate up your your whole savings. Um, so those companies it may make sense to just either do a stipend, okay, um, or or scrap them all together.
SPEAKER_00So you can't necessarily self-administer, you would have to do the stipend instead.
SPEAKER_02Uh you could self-administer, but then as an employer, you've got to keep track of your your paperwork and make sure that somebody has benefits that you're reimbursing them for and not just saying, hey, I want$700 a month. Yeah.
ICRA Mechanics And Employee Guidance
SPEAKER_00That sounds complicated. So kind of to wrap up some of that. So companies that are priced out of group coverage and ICRA can be a good spot for them. Geographically diverse teams, it's fine to be in an ICRA. It doesn't necessarily matter. But if you want predictable costs for your organization, especially around your health care. So if self-funding isn't an option for you, which I know we've talked about in another episode, an ICRA could also be something from a ta from a cost savings perspective. Yes. So and there is a threshold at which point it doesn't make sense for you to to have an ICRA. So kind of thinking about what that looks like. And if you're say like what under 10 employees, maybe you want to think about it. Yeah. About not having maybe doing the stipend instead. Yeah. Okay.
SPEAKER_02A lot of companies that administer administer them won't go down less than 10 just because it's not cost effective. You're eating up any savings you had.
SPEAKER_00Okay. So let's talk about the hard conversation, which is, you know, sometimes companies just can't afford their benefits anymore. So can they can the company remove health insurance benefits entirely if the cost becomes sustainable? And what does that what does that look like?
SPEAKER_02Mm-hmm. So yeah, they can do that. Um, I got a call about two weeks ago from a company. They're like, our employees, it's our health insurance is more than our payroll. Oh, wow. Now you know, we we can't continue to do this. What if we want to give raises? And that's that's become something now is people aren't getting raises because the health insurance is going up. Um so what what do they do? You know, do they scrap benefits altogether? Um, but what I'm finding, at least the ones I'm talking to because they're calling, is they don't want to just they these are their employees. They don't want to just send them out, you know, they don't want to feed them to the wolves. They they wanna to help them and you know, send send me in to to guide them along the way. Um just it's it's a fine line to, you know, you want to protect, you gotta protect the the business, yeah, but you don't want to feed your employees to the wolves either, because if they all leave.
SPEAKER_00Yeah. So most of the time are you seeing organizations replace their benefits with some type of alternative? Yes. Okay, yeah. So rarely do they just completely eliminate them altogether. I would agree. It tends to be a telltale sign for an organization if they eliminate their health insurance plan and don't have any other alternatives.
SPEAKER_02Yes. Yeah. So yeah. Then when we see them close, it's not a surprise. Yeah.
SPEAKER_00It's not a surprise. So when companies are rethinking their benefits, what are some creative approaches that you're seeing right now?
SPEAKER_02Mm-hmm. What I'm seeing more, especially in the under 50 market, is which is most of our audience, less than 50 employees. Yes, they are giving them a stipend. Okay. Um, because they don't have to worry about offering coverage. Then they don't have to worry about dealing with Cobra. They've just, you know, they're giving them a stipend to do that. Um, but again, you just want to make sure you're not feeding your employees to the wolves. Even the ones that I've talked to, you know, I've gotten a I hate talking to you every year. Every year. Nobody ever, I get a complex. Nobody ever is excited to talk to us for an all-time.
SPEAKER_00What about voluntary benefits? Are they offering voluntary as an alternative? Okay.
SPEAKER_02Yes. I even had one that they quit offering benefits. They're giving them a stipend, but oh, now they're paying for dental envision for everybody. Oh, okay.
SPEAKER_00Because it's something that's less expensive and sustainable. Yep.
SPEAKER_02Yeah. Or they're starting to put in more voluntary benefits as well. The employees are used to, you know, paying for health insurance now. So, you know, can they look at an accident plan or critical illness or things like that? I'm starting to get a lot of requests now for disability insurance. Really?
SPEAKER_00Mm-hmm. Okay. On the voluntary side. Yeah. Okay. Interesting. Mm-hmm. So, you know, these decisions can really feel overwhelming for business owners and they can feel overwhelming for their employees. So, how do you and how does AUI help companies through their options? How do you take them through the process?
SPEAKER_02Um, again, I just get to know my groups and I sit down with them and we explain what we're doing. Um, I'm big into printouts. Yeah. And show I'm a pointer. Yes. So sitting down and explaining the differences to everybody and just letting them know they're not alone. Yeah. I'm I'm their partner. I'm not their broker.
SPEAKER_00Yeah, taking the time to explain it. So if someone today is listening, they you know they don't have you as their broker and they're feeling stuck with their current costs. What's one thing that they should do next besides call you immediately?
SPEAKER_02Sit down and figure out what they have.
SPEAKER_00Okay. Meaning like look at their plan.
SPEAKER_02Look, look at their plan. Um, when was the last time they heard from their broker?
SPEAKER_00Yeah. Good question.
SPEAKER_02Or that the broker explained to them what they have. I've been on a roll lately going out to my the groups explain the group benefits explaining what they have in their plan. Because most people, they they see me coming, they're they zone out. She's just giving us an increase. Yeah, exactly. Where there's are there's some good things built in there. So trying to explain, you know, what's out there and the good stuff.
SPEAKER_00Yes. So utilizing the things in their plan that are covered no matter what, the zero dollar things, making sure they use their wellness benefits. Yes, exactly.
SPEAKER_02Or some of them they get rewards for things. I'm big on that.
unknownYes.
SPEAKER_00Get your steps in, get your training done. Exactly.
unknownYeah.
SPEAKER_00So, Alice, thank you for your time today. We're gonna wrap up the episode with the same question that we ask everyone, which is how can business leaders get 1% better in their business this week?
SPEAKER_02Look at your benefits, see if they're still working for you. Yeah. And if and if not, call me.
unknownI like that.
COBRA And ACA Compliance Realities
SPEAKER_00Well, Alice, thank you for your time talking about something that can be really uncomfortable, taking apart your health insurance plan, potentially doing something different for your employees. So thank you for the time that you gave us today. Thanks for having me. And I'll be back with a quick summary of what we talked about. A few things that I took away from my conversation with Alice today, because I know this topic can really feel heavy for a lot of small business owners. So, first, if your business costs are starting to feel unsustainable, you're not alone. Rising healthcare costs are really putting pressure on businesses everywhere. And many leaders are asking that same question, which is how do we continue to take care of our team while still protecting the health of the business? So you're not alone if you're having this question going on in your head. And then second, what I heard loud and clear from Alice is that you're not limited to one model. The traditional group health plan has been like a default for decades, but there are other options for you. It's not the only way that you can really support and sustain your employees anymore. So there are options like ICRAs, define contribution models, and voluntary benefits. And they allow you to take care of your employees and take care of some of their healthcare costs while also making it better for your bottom line and a more sustainable expense. And then third, I would say deconstructing your benefits doesn't mean that you're abandoning your team. It means stepping back and asking a strategic question, which is really what is the best way for the organization to support our people in size and resources and goals? And sometimes that means redesigning your health insurance plan. So sometimes it means shifting to a different model. It may mean moving your insurance to a stipend model. And sometimes it also means getting creative in how you can provide value to your team members. And finally, I would say the biggest takeaway for me is this, and that's benefit strategy should be intentional. Too often businesses just renew into the same plan. They don't shop their benefits, they don't think about what the expense is until it's too high and too fast. And so if you can step back and you can say some things around your strategy and you can explore what your benefits really need to look like, I think that's where you can get some powerful traction to be able to move your benefits forward. So if you're listening and your benefits costs are starting to feel overwhelming, I think this might be a good time to pause, take a step back, and explore what other strategies may be available to you. And I would encourage you that if you're thinking about deconstructing your benefits, that you would give Alice and the team at AUI a call.