What's the easiest health benefit option for small teams?

If you employ a small workforce, you know how crucial it is to offer an attractive health benefit to retain your staff. However, most traditional options are better suited for larger organizations with more resources. In many cases, small employers lack the time to work with insurers, complete complex paperwork, or navigate the annual renewal process.

Luckily, there are simpler and more flexible alternatives that can ease your administrative burden. Below, we’ll walk you through four health benefit options — arranged from easiest to hardest to manage — that can work for businesses with small teams.

In this blog post, you’ll learn:

• Which health benefit options are easiest for small teams to design and administer.
• How each health benefit option works for employers and employees.
• How to choose the right benefit for your team based on administrative effort, flexibility, and budget.

1. Qualified small employer HRA (QSEHRA)

A qualified small employer health reimbursement arrangement (QSEHRA) is a health benefit the federal government created specifically for small employers with fewer than full-time equivalent employees (FTEs). It’s the simplest health benefit for small teams to administer.

With a QSEHRA, you give your employees a fixed monthly allowance up to the IRS annual maximum limit, and they purchase their own individual health coverage that meets minimum essential coverage (MEC). Then, they submit claim documentation for eligible medical expenses, such as vision exams, routine physicals, and preventive care. Once approved, you reimburse them, tax-free, up to their set allowance amount.

What makes the QSEHRA easy:

• There’s no need to manage multiple group health insurance plans or carriers. You set one allowance for all your employees that works for your budget. If you want extra flexibility, you can customize monthly allowances based on age and family status.
• If you’re administering your QSEHRA with PeopleKeep by Remodel Health, you can only adjust allowances by family status. If you want to offer different allowances to different ages, consider the next option on our list.
• There are no minimum participation requirements, so you don’t have to worry about hitting a certain enrollment threshold to offer the benefit.
• There are no annual plan renewal negotiations or rate hikes. At the end of the plan year, you can choose to update your allowance amounts based on your budget and goals.
• You can work with an HRA administrator, such as PeopleKeep by Remodel Health, to help you manage your benefit and minimize paperwork.
• During plan design, you can choose to reimburse employees for health insurance premiums and out-of-pocket medical expenses or premiums only to keep costs down. According to our 2025 QSEHRA Report, 86% of PeopleKeep customers chose to reimburse employees for premiums and out-of-pocket medical expenses in 2024.

However, the tradeoff for the QSEHRA’s simplicity is its limited customization. Outside of varying allowance by age or family status, you must offer the benefit on the same terms to all eligible employees.

2. Individual coverage HRA (ICHRA)

An individual coverage HRA (ICHRA) works similarly to a QSEHRA, but it has greater flexibility for employers. This makes it a good option for growing teams or employers with diverse teams.

Like a QSEHRA, the ICHRA enables employers to offer a monthly allowance while employees pay for their own individual health insurance plans and other medical expenses. But unlike the QSEHRA, you can vary eligibility rules and allowances using 11 types of employee classes, such as full-time vs. part-time or salaried vs. hourly. It’s also available to organizations of all sizes.

What makes the ICHRA relatively easy:

• You still avoid managing a group insurance policy or dealing with complex renewals.
• There are no contribution limits, so you offer your employees as much allowance as your budget allows and scale the benefit as your team grows.
• Employees choose their own coverage, provider groups, and healthcare services, reducing employer involvement. As long as they enroll in a qualified health plan that provides MEC, they can participate in the ICHRA.
• If your company grows to the size of an applicable large employer (ALE), you can design the ICHRA to satisfy the ACA’s employer mandate, so you don’t have to switch to a traditional health plan.
• The ICHRA can support all types of workforce regardless of ZIP code, including remote and multi-state teams. This allows them to get individualized, proactive care in their area and better control their health outcomes.

An ICHRA keeps administration fairly simple, but it can require more planning than the QSEHRA. For example, you’ll need to choose employee classes that use job-based criteria to stay compliant with federal regulations. There are also rules around affordability and premium tax credits, and the benefit must meet affordability standards if your company grows to the size of an ALE.

However, a good HRA administrator, like PeopleKeep by Remodel Health, can help you navigate plan design and compliance requirements so you avoid mistakes or unnecessary stress.

3. SHOP coverage

Small Business Health Options (SHOP) marketplace plans are a form of group coverage, but small employers buy them through a public exchange, such as the federal Health Insurance Marketplace or a state-based exchange.

With SHOP, you select a group medical plan for your entire team, and employees have the choice to enroll in the policy. SHOP plans must follow certain standardization parameters, such as covering the ten essential health benefits, like preventive care, well-child visits, and prescription drug benefits. In most cases, you’ll split the cost of premiums with your employees; however, you must offer the plan to all your full-time workers.

Why SHOP marketplace plans are moderately easy:

• The SHOP platform centralizes enrollment and plan management. You can shop for coverage at any time during the year — you don’t have to wait until the annual Open Enrollment Period.
• You may qualify for the Small Business Health Care Tax Credit, which can offset the overall costs of offering a small employer plan.
• Employees are often familiar with how group plans work, so there’s no learning curve.
• You can work with a SHOP agent or broker to help you choose the right plan for your company.

SHOP simplifies some aspects of group coverage, but there are still some challenges. You must meet participation requirements (typically around 70%), which can be difficult for small teams. You’ll also need to manage medical plan selections, insurer negotiations, rate hikes, and the annual renewal process.

Plus, SHOP plans aren’t available in every state, requiring employers to find coverage through brokers or carriers directly. If you’re looking for predictability and cost control, a defined-contribution HRA is often a better choice than a traditional small employer plan.

4. Small group health insurance

Traditional group health insurance is the most familiar coverage option, but also the most complex to manage for small teams. With this approach, you select and sponsor a group policy through a broker, carrier, or private exchange. You’ll choose the plan, negotiate rates, and manage enrollment for your employees.

Why traditional small group health plans the most complex option:

• You must meet participation and employer contribution requirements.
• Plans typically renew annually, often with rate increases that require renegotiation.
• You’re responsible for managing plan details, employee questions, and ongoing administration.
• Those offering a small employer plan must pay a portion of their employees’ premiums. In 2025, the average annual premiums for group health insurance were $9,325 for self-only coverage and $26,993 for family plans¹.
• The “one-size-fits-all” structure of group plans may not meet the needs of every employee.

While group plans are still one of the most popular benefit options, they require more time, coordination, and oversight compared to HRAs. This can make them less feasible for small teams looking to reduce their administrative workload.

How PeopleKeep can help you keep HRA administration easy

Offering a QSEHRA or ICHRA is already one of the simplest ways to provide health benefits, but the right administrator can make it even easier.

With PeopleKeep by Remodel Health, you don’t have to tackle the daily tasks that come with offering an HRA. Instead of tracking receipts, verifying expenses, or keeping up with compliance rules, we’ll handle the heavy lifting so you can focus on other business needs. Our HRA software makes administering an HRA so simple that most employers only need just a few minutes per month to manage their benefits.

Here’s how PeopleKeep simplifies HRA administration:

• We’ll help you design a compliant QSEHRA or ICHRA with support every step of the way, from setting your monthly allowance amount to choosing the right ICHRA employee classes for your workforce, regardless of ZIP code.
• Employees submit expenses for healthcare services through their PeopleKeep dashboard, and our team reviews and processes their claim documentation for you. We’ll email you after a claim is approved so you can process their reimbursements.
• Our software has built-in safeguards to ensure your HRA complies with federal regulations, so you can avoid mistakes or costly penalties.
• Whether it’s Open Enrollment or they qualify for a special enrollment period, employees can shop for individual health insurance right from their dashboard and manage their reimbursements all in one place. Our customer service team is available if they have questions or need help.
• As your company grows, our parent company, Remodel Health, offers more hands-on support with its ICHRA+® administration solution so you never miss a compliance requirement.

Conclusion

There are several health benefit options available these days. But the easiest health benefit for your small team comes down to how much time and energy you want to put toward administrative tasks. While traditional group plans may feel familiar, options like the QSEHRA and ICHRA offer a flexible, predictable way to offer benefits, allowing you to control costs without the extra hassle.

If you’re ready to simplify your benefits, PeopleKeep by Remodel Health can help you easily set up and manage a QSEHRA or ICHRA so you can focus on running your business. Schedule a call with one of our HRA specialists today to learn more.

References

1. 2025 Employer Health Benefits Survey