Health benefits trends empowering SMBs this enrollment season

For small and midsize businesses (SMBs), planning for the next open enrollment period can seem daunting – especially compared to larger firms that are often resourced with better leverage to combat rising healthcare costs and dwindling benefits.

It’s no shock that several of these employers have had to drop out of the benefits game altogether. According to the Council for Affordable Health Coverage, the number of small businesses offering health benefits decreased by more than 16% between 2020 and 2023. And as health benefits premiums continue to skyrocket with each flip of the calendar, it’s fair to presume that even more SMBs will be forced to follow suit.

Thankfully, there are some refreshing health benefits options currently gaining steam on the employer-sponsored market – level-funded health plans and Individual Coverage Health Reimbursement Arrangements (ICHRA). These solutions are a breath of fresh air that could help SMBs everywhere come out on top this enrollment season.

Level-funded health plans

With a fully funded plan, the insurer accepts all risk and charges more for it, and with a self-funded plan, the employer assumes the risk in a pay-claims-as-you-go setting. But with level-funded plans, businesses and insurers share the risk and set a limit on employers’ financial responsibility through stop-loss coverage. It’s the best of both worlds.

Employers get the security of knowing exactly what their health benefit costs will be month to month and can potentially get a refund at the end of the plan year if their group’s claims are lower than expected.

According to KFF, nearly 40% of SMBs offered a level-funded plan in 2023, up from just 13% in 2020. Pair the financial advantages of lower risk with an emphasis on more flexible plan designs (like Comfort®), and it’s clear why this strategy is growing in popularity.

Cost control meets greater choice with ICHRA

Another health benefits solution changing the game for SMBs is ICHRA. ICHRAs allow employers to make pre-tax defined contributions to their employees, who can then use the funds to purchase a health plan of their choice from the individual marketplace. ICHRAs can be a win-win for both employers and employees, who respectively enjoy cost predictability and more personal choice.

According to the HRA Council, the number of businesses offering ICHRAs has increased by 350% since 2020, and most of these businesses are small and midsize. Gravie also recently teamed up with Wakefield Research to survey 500 U.S. health benefits decision-makers who don’t currently offer ICHRAs, and found 87% of these employers think ICHRA could be a long-term fit for their company. In a market where group size often dictates available plan designs and cost-sharing structures, smaller firms have certainly felt the pull of ICHRAs most profoundly.

At Gravie, we’ve been helping employers of all sizes facilitate ICHRAs since they were first introduced – and we’ve been helping employers leverage the individual market for employee health benefits since 2013. With Gravie ICHRA™, our industry-leading platform makes it easy for employers to implement and manage ICHRAs from start to finish.

The tides of the employer-sponsored market are certainly changing. Armed with solutions like ICHRA and level-funded plans, SMBs have more power than ever before to level the benefits playing field.

Start comparing innovative health benefits options like these today. Contact us to see if level-funding or ICHRA through Gravie could be the right fit for your business.