How to give employees the best affordable health insurance

Offering quality health insurance is one of the best ways employers can support their workforce. But, the problem with many traditional health benefits is often the cost. Many employers believe the best affordable health insurance plan for them is financially out of reach for their company. But that’s actually not the case. Affordable, high-quality alternatives are available for organizations of every size and budget.

The following article will walk you through the three steps you need to take to ensure you’re offering your employees the most affordable health insurance benefits on the market today.

In this blog post, you’ll learn:

• How to reduce employee health insurance costs without sacrificing quality using three effective strategies.
• Flexible health insurance options that empower employees to choose the policies and covered services that best fit their needs.
• How the individual coverage health reimbursement arrangement (ICHRA) can provide affordable, customizable health benefits for both employers and employees.

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1. Decrease what they pay for coverage

Let’s say you offer a quality health plan with a large provider network, various covered medical services, and low cost-sharing amounts. Your employees may show interest in such a plan. But they won’t be able to enroll if they can’t afford it. 

Employees are aware of the rise in healthcare costs across the U.S. They want to keep their premium and out-of-pocket expenses as low as possible. And you can help them do that.

Here are a few ways you can lower your employees’ health insurance costs:

1. Increase your employer contributions. One of the most effective things an employer can do is cover a higher percentage of their employees’ monthly premiums. According to KFF, employers covered about 85% of employee premiums for self-only policies and roughly 75% of family health insurance plan premiums in 2024¹. Increasing those numbers to 90% and 80% can reduce your team’s financial stress. However, it will increase your costs as an employer. 
2. Offer them a tax-advantaged health benefit. Another way to lower employees’ healthcare costs is to add a tax-advantaged benefit to their compensation package. Health reimbursement arrangements (HRAs), health savings accounts (HSAs), and flexible spending accounts (FSAs) are excellent options that can help employees save and pay for qualified out-of-pocket expenses using tax-free dollars. 
3. Switch to a different health plan. Your last option is to choose a health plan that reduces your employees’ medical care expenses. High-deductible health plans (HDHPs) have lower monthly premiums but higher out-of-pocket costs. Try a low- or no-deductible plan to make covered healthcare services more affordable for your workers. An ICHRA is an even better choice. We’ll share more about that later.

When you charge your employees less for their health benefits, they’ll be able to save more money for future use, whether for retirement, unexpected medical bills, or even a vacation.

2. Give them access to public and private exchange plans through an HRA

Even though it’s popular, group health insurance isn’t your only option. Health benefits like HRAs allow your employees to choose their own individual health coverage on a public or private health exchange. Instead of opting for a one-size-fits-all group plan, employees can access a wide range of health insurance policies that are likely better suited to meet their needs.

Below are three advantages of shopping on public or private exchange:

1. There’s greater flexibility. Public and private exchanges offer various plans from several insurance companies. Employees can choose coverage based on what matters most to them, such as lower monthly health insurance premiums, a specific network, or covered services.
   
2. Employees have more choices. In 2023, consumers had an average of 88 health plans to choose from on the individual market². With group coverage, most employers only offer a choice of one or two plans. Whether your employees shop on a public or private exchange, your staff can find a health insurance policy that aligns with their budget and personal health.
   
3. The health plans are portable. Employees who buy an individual health plan can keep it even if they change jobs. This means fewer gaps in medical coverage, more continuity of care, and greater stability.

Another upside of leveraging public and private exchanges is that it relieves some of your burden as an employer. Group health coverage requires you to deal with insurance carrier negotiations, plan renewal rate hikes, and complex administration tasks. Allowing your employees to choose their own coverage will give you more time and additional resources to spend on other aspects of your business.

3. Increase their total coverage

If you decrease how much your staff pays for health insurance, you may have made it affordable. But, it may not be the best. To have the best and most affordable health insurance, you must offer a health benefit that provides your employees with enough coverage. 

The following are a few strategies that can improve your employee’s health insurance coverage:

1. Choose plans with higher levels of coverage. If your current health plan is on the lower end of the metallic tiers of coverage, consider offering a plan with more benefits, including lower deductibles, more covered services, and higher coinsurance rates. These plans tend to have higher premiums. But, they offer employees complete coverage, which can improve satisfaction. Plus, you can always increase your contribution to offset the higher premium cost for employees.
2. Add in supplemental benefits. If your current health insurance plan has limited covered services, you can add supplemental policies to your benefits package. These plans can include dental and vision coverage, critical illness insurance, and accident plans. Providing supplemental benefits gives employees access to medical care their major medical plan may not cover without having to buy these policies on their own. 
3. Offer a workplace wellness program. Workplace wellness programs support employee health by encouraging healthy behaviors, which can reduce stress and improve productivity. These programs can lead to a healthier staff and allow employees to contribute to positive health outcomes at work.

If you’re unsure how to improve your health insurance coverage, work with a licensed agent or broker to help you make an informed decision. Brokers and insurance agents can help you review your current policies, negotiate with health insurers, and create a custom health benefits package that balances coverage and cost. 

Why the ICHRA is an affordable health benefit solution for employees

At this point, you’re probably wondering what health benefit option can achieve these three steps. Well, here’s the answer—the individual coverage HRA (ICHRA). The ICHRA is a formal but customizable health benefit that can support organizations of all sizes. With the ICHRA, you can give your staff tax-free contributions for their qualified individual health insurance premiums. 

If you’re used to group health insurance, the ICHRA may be new to you. But luckily, it’s easy to understand. First, you’ll choose a monthly amount of tax-free money, called an allowance, to offer your employees. Unlike other HRAs, the ICHRA has no annual contribution restrictions, so you can offer whatever dollar amount works best for you. Then, your employees pick their preferred individual health plan and use their allowance to pay for the monthly premiums. 

Here’s how the ICHRA provides a solution for the three steps in the sections above:

1. They help control costs. The average premium for an individual health plan is $497 per month³. By offering an ICHRA, employees can use the allowance you give them to cover some or all of this cost, keeping more money in their pockets. ICHRA reimbursements are also income-tax-free for your staff, saving them money during tax season. As long as you offer an affordable allowance, an ICHRA can satisfy the ACA’s employer mandate.
2. Employees have access to individual health plans. An ICHRA allows employees to shop for individual coverage through a public or private health exchange. They have complete control and can select a plan based on whether they want lower premiums, lower deductibles, networks that cover specific providers, or certain covered services. As long as they choose a qualifying form of individual health insurance, they can use the ICHRA.
3. The individual plans employees choose provide total coverage. Comprehensive health coverage means different things to different people. The ICHRA allows each employee to select whatever health plan is best for them. For example, someone may choose a gold-level health plan while another chooses a policy with a specific provider network. Many health insurers also allow bundling for supplemental plans for greater coverage or offer wellness incentives to reduce average premium costs.

The ICHRA benefits employers and employees. By choosing their own coverage, employees experience more choice and control over their healthcare. For employers, you’ll cut costs and administrative time while still offering your employees a meaningful health benefit. 

Conclusion

In today’s competitive job market, offering the best affordable health plan isn’t only about cutting costs. You must deliver a health benefit that provides your employees with enough value. When you focus on affordability and quality, you’ll not only meet your team’s healthcare needs, but you’ll also be in a better position to attract talented workers and scale your business for long-term success.

Remodel Health’s ICHRA+® solution makes it simple for every employer to design an ICHRA. We offer customized benefits that provide cost savings for you and flexibility for your employees. Plus, we have an expert support team to guide you every step of the way with our white glove service. If you want to learn more about ICHRA+®, contact us, and we’ll help get you started!

This blog article was originally published on October 7, 2021. It was last updated on April 14, 2025.

1. KFF 2024 Employer Benefits Survey
2. The individual health insurance market in 2023
3. KFF health insurance marketplace average benchmark premiums

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