Health insurance is one of the biggest line items in a small business budget, and it’s getting more expensive each year. But here’s the good news: you don’t have to cut coverage to cut costs.
There are smart, strategic ways to reduce your health insurance expenses while maintaining—or even improving—the value you deliver to your employees.
Here are five (5) proven strategies to reduce your health insurance costs without reducing value for your employees.
- Switch to a High-Deductible Health Plan (HDHP) with an HSA or HRA
- Switch to a Level-Funded Group Health Plan
- Pay for Employee-Purchased Health Insurance via an HRA or Stipend
- Join a PEO for Access to Large-Group Rates
- Re-Evaluate Your Health Benefits Program Every Year
Offering health insurance is a meaningful way to support your team, but it’s also one of the biggest expenses for a small business. You don’t have to slash benefits to save money.
1. Switch to a High-Deductible Health Plan (HDHP) with an HSA or HRA
High-Deductible Health Plans have lower monthly premiums. When paired with a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA), you can still provide strong financial support to your employees while saving money.
Why it works: You lower premium costs, and your employees gain access to tax-advantaged tools to cover their initial out-of-pocket medical expenses.
2. Switch to a Level-Funded Group Health Plan
Level-funded plans blend the best of traditional group insurance and self-funding. You pay a fixed monthly amount, and if your employees’ claims are lower than expected, you may get money back at the end of the year.
Why it works: You gain more predictable costs than self-funding, mixed with more potential savings than traditional group plans.
3. Pay for Employee-Purchased Health Insurance via an HRA or Stipend
With options like Individual Coverage HRAs (ICHRAs), Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), or taxable benefit stipends, you can reimburse employees for plans they buy on their own—often at a lower cost than group coverage.
Why it works: You set the budget, and your employees choose the coverage that best fits their personal needs.
4. Join a PEO for Access to Large-Group Rates
Professional Employer Organizations (PEOs) allow small businesses to join a larger employee benefits pool (”large group”). This can give you access to better rates and broader coverage than you’d qualify for on your own as a “small group”.
Why it works: You leverage the buying power of thousands of employees to get better group plan pricing.
5. Re-Evaluate Your Health Benefits Program Every Year
Don’t just renew your existing health benefits program without looking around. Health plan options and pricing change every year. Work with a licensed advisor to compare alternatives and make sure you’re not overpaying.
Why it works: A quick annual review can uncover major savings without changing the quality of your benefits.
LegUp Health Can Help
At LegUp Health, we help Utah-based small businesses explore creative ways to save on health insurance while still taking great care of their teams. Whether you’re looking at HDHPs, level-funded plans, ICHRAs, or PEOs, we’ll guide you every step of the way.
Let’s find the best-fit solution for your business. Book a free consultation today.
