What to do if employees are asking for help with health insurance

Health insurance is one of the most sought-after offerings an employer can provide. PeopleKeep by Remodel Health's Employee Benefits Survey found that 92% of employees consider health benefits important. But what if you're a small employer and health insurance seems out of reach?

Rising healthcare costs have made it harder for employees to afford coverage on their own. When they come to you for help, they’re not necessarily asking you to pick a plan for them. They’re asking for support in paying for coverage.

In this article, we'll explain how you can help employees with their healthcare costs without placing them into a one-size-fits-all group health plan.

In this blog post, you'll learn:

• Why traditional group health insurance often falls short.
• How HRAs offer a more flexible alternative.
• Which HRA is right for your business.

Why traditional group health insurance falls short

For decades, offering a group health insurance plan was the default way to provide benefits. But for many small business owners, that model no longer works as well as it once did.

Here’s why traditional group health insurance falls short:

• Cost. Health insurance premiums continue to rise year after year, and employers shoulder a significant portion of that expense. What starts as a manageable investment can become one of the largest line items in your budget. Many turn to self-funded health plans to save money, but unexpected medical claims can create too much risk for small businesses to handle.
• Rigid. You typically choose one plan for your entire team, regardless of how different their needs may be. A plan that works well for one employee might be a poor fit for another, especially if your workforce spans different ages or healthcare needs.
• Participation requirements. Many group plans require a certain percentage of employees to enroll, which can be difficult if some team members already have coverage through a parent or spouse or prefer to shop on their own. If you don’t meet those thresholds, you may not be able to offer the plan at all.

When you add it all up, traditional group health insurance can feel like a high-cost, low-flexibility solution, especially for small and growing businesses.

Leveraging the individual market with a health reimbursement arrangement

Even if a traditional group plan doesn’t fit your budget, that doesn’t mean you can’t offer meaningful support through a different type of health benefit.

Instead of sponsoring a group policy, you can reimburse employees for their individual health coverage through a stand-alone health reimbursement arrangement (HRA). An HRA is a Section 105 plan governed by IRS rules.

With an HRA, your contributions are tax-free for both you and your employees, and you can define a budget that works for your business without being locked into unpredictable premium increases.

Here's how it works:

• You provide employees with a monthly allowance. This is the most you’ll pay per employee.
• They purchase their own health insurance and pay for out-of-pocket expenses, such as monthly premiums and preventive care services.
• They provide proof of their eligible medical expenses to you or your HRA administrator for reimbursement.
• You reimburse them up to their allowance amount.

The HRA experience feels more personalized and often leads to higher employee satisfaction. Your employees can choose the health insurance plans that work best for their situation, rather than trying to make a single employer-sponsored coverage option fit.

HRAs have no minimum participation requirements, and they can provide substantial financial savings. If you have fewer than 50 full-time equivalent employees (FTEs), you aren’t subject to the Affordable Care Act’s employer mandate. This means you can offer as much as you want in monthly allowances. If you have 50 or more FTEs, however, you’ll need to ensure that you offer an affordable allowance to your employees.

Which HRA fits your business?

If you’re considering an HRA, the next step is choosing the type that aligns with your company.

There are two HRAs you can offer in place of a group health plan:

1. The individual coverage HRA (ICHRA): Employers of any size can use an ICHRA. It's particularly useful for applicable large employers (ALEs) that need to meet the ACA’s employer mandate. There are no annual limits on contributions. You can vary allowances and benefit eligibility based on 11 employee classes, such as full-time employees and part-time employees. You can also differ allowances by employee age and family size. This makes the ICHRA especially appealing for growing or diverse teams. Employees need their own individual health insurance plans to participate in the ICHRA.
2. The qualified small employer HRA (QSEHRA): The QSEHRA is for small businesses with fewer than 50 full-time equivalent employees (FTEs). It's not as flexible as the ICHRA since it comes with annual limits on employer contributions. Employers also can't vary allowances by employee class, only by age and family size. However, more of your employees may be able to participate in the QSEHRA since it only requires that they have minimum essential coverage (MEC), not individual health insurance coverage. This means they can still receive tax-free reimbursements if they have health coverage through a parent's or spouse's group plan.

HRA comparison chart

Here’s a side-by-side look at how ICHRA and QSEHRA compare.

In general, new-to-benefits employers who want a simple solution tend to gravitate toward QSEHRA, while those looking for scalability and flexibility often prefer ICHRA. Both options allow you to move away from group health insurance and toward a more flexible model.

Special enrollment period for HRAs

One of the biggest challenges employees face when buying health insurance is timing. In most cases, individuals can only enroll in coverage during the annual Open Enrollment period, which typically happens at the end of the year. That delay can be frustrating, especially if your employees need coverage sooner.

Along with tax benefits, here’s where HRAs offer yet another major advantage. Offering an HRA for the first time triggers a special enrollment period (SEP). This means your employees don’t have to wait for Open Enrollment to buy a plan. Instead, they receive a 60-day window to explore their options and enroll in coverage as soon as their benefit becomes available.

This is one of the most overlooked advantages of a defined contribution strategy. It allows you to respond to employee needs in real time, rather than telling them to wait months for a solution.

How PeopleKeep by Remodel Health can help

If you’re new to health benefits and HRAs, the learning curve can feel overwhelming. But it doesn’t have to be. It's easy to navigate these changes when you work with a trusted HRA administrator.

PeopleKeep by Remodel Health helps small business owners launch and manage HRAs without the administrative burden. From initial setup to ongoing reimbursements, our platform handles the heavy lifting while keeping you compliant with regulations.

Your employees also benefit from a smoother shopping experience. They don't have to navigate state or federal health insurance marketplaces on their own. Instead, they can conveniently shop for coverage straight from their PeopleKeep dashboard.

Conclusion

When employees ask for help with health insurance, it’s easy to assume your only option is to offer a traditional group health plan. But as costs rise and workforce needs evolve, that model is no longer the best fit for many small businesses. By offering a health reimbursement arrangement (HRA), you can provide meaningful, tax-advantaged benefits while giving your team the flexibility to choose coverage that works for them.

This blog article was originally published on May 21, 2015. It was last updated on May 14, 2026.