Health insurance rates are increasing each year in the small-group market, but did you know there are many alternatives to offering your employees benefits, such as setting up an HRA or working with a PEO?

‍Price hikes on group health insurance in Minnesota are causing many business owners to look for more affordable group plans or alternative health insurance options for their employees. If you’re a small to mid-sized business looking to change your current offerings or provide benefits for the first time, there are a few different ways you can structure your benefit offerings depending on your budget, the level of financial risk you are comfortable with, and how much you value plan variety. 

Minnesota has a number of high-quality health insurance carriers that offer plans for both individuals and businesses. You can review Minnesota’s top-rated insurance carriers on MNsure, including BlueCross BlueShield of Minnesota, Health Partners, UCare Minnesota, and Medica of Minnesota.

These carriers have 4-5 star quality ratings from real-life customers, have reasonably affordable premiums, and almost all offer in-network providers. Due to the wide variety of high-quality plans available directly on the state exchange, small business owners in Minnesota can take advantage of the lower costs of individual plans vs. group plans when setting up their employee benefits through a Health Reimbursement Arrangement (HRA)—see below.

Through a Health Reimbursement Arrangement, employers can reimburse employees for their own health insurance premiums instead of paying for a group plan. In Minnesota, individual rates are 62% cheaper compared to group rates.

As a small to mid-sized business, many alternatives exist to offer employees benefits rather than group health insurance. These options are designed for smaller companies and tend to be more affordable.

Professional Employer Organizations (PEOs), self-funded plans, Health Reimbursement Arrangements (HRAs), and small group insurance are among the most common. Each of these options works a bit differently, has advantages and disadvantages, and each has its own unique features. 

Take a look at the comparison chart for an overview of each option, or you can review the article, PEOs vs. HRAs vs. Group Health vs. Self-Funded: Which Makes The Most Sense For Your Business, for a more in-depth explanation of each. 

The Minnesota state exchange is an excellent place for small business owners to look for employee health insurance since the cost of individual plans versus group plans is significantly lower. Individual plans in Minnesota are 62% cheaper than the group plans offered.

Liferaft makes it easy for owners to set up a Health Reimbursement Arrangement. The Liferaft team will analyze your employee census and make plan recommendations for each employee using the state exchange. These recommendations will consider each employee’s location, age, family circumstances, and the plan’s provider network quality. Which then allows employees to choose the best coverage for their specific needs.

Through your Health Reimbursement Arrangement, you can then reimburse your employees for their individual health insurance premiums.

Individual Coverage HRA (ICHRA): Allows employers to reimburse employees for individual health insurance premiums and qualified medical expenses. The ICHRA is available to employers of all sizes and requires employees to be covered by an individual health insurance plan or Medicare. 

‍Qualified Small Employer HRA(QSEHRA): A plan for small businesses with less than 50 full-time employees. The QSEHRA allows employers to reimburse employees for individual health insurance premiums and qualified medical expenses.

‍Standard HRA: Also known as Group Coverage HRA is a plan offered in addition to group health insurance. Employees must be enrolled in group health insurance through their company to utilize the Standard HRA. Reimbursements cannot be used for premiums, only qualified medical expenses.

‍Expected Benefit HRA (EBHRA): The plan allows employers to offer their employees financial assistance with dental, vision, short-term insurance, and other health-related costs that traditional group health plans may not cover. An EBHRA is a good option for employers who wants to offer employees an HRA in addition to their traditional group health plan.

Can I offer my employees an HRA if they are currently enrolled in health insurance? 

Yes. A Health Reimbursement Arrangement (HRA) can be offered in lieu of or in addition to traditional group coverage. As the employer, you set a monthly benefit allowance for employees to use on qualified medical expenses. Depending on the type of HRA you set up, the money can be used to pay monthly insurance premiums, deductibles, and even health expenses like IVF or therapy. 

‍How do I find a PEO? 

You should first establish your company's needs so you know exactly what features and services you want. Once you have that sorted, a great place to search for PEOs is the National Association of Professional Employer Organizations (NAPEO). Here you can search PEOs by state and see if they are accredited or not. 

‍What do I need to get started with a Liferaft HRA? 

Setting up a Liferaft HRA is simple. First, we’ll need your company’s name, location, and size. Next, you’ll decide how much you want to reimburse your employees for benefits, send us an employee census, and complete some quick company documents. Finally, your company is all set! To learn more about setting up a Liferaft HRA, view our Small Business Benefits program.

Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.

During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.