Benefits for Small Employers & Start-ups
Comparison at a Glance
1. Do Nothing
What it means
Your company does not sponsor or contribute toward any group health plan.
Employees secure coverage on their own—through an individual market plan, a spouse’s employer plan, Medicare/Medicaid, or go uninsured.
Pros
No employer-side premiums or administrative burden. You avoid monthly carrier invoices, enrollment windows, compliance filings, and renewal negotiations.
Simplicity. No need to coordinate with Tsunami Health or any benefit-administration vendor.
Cons
Recruitment & retention impact. In today’s market, lack of health benefits makes it harder to attract or keep talent.
Employee financial stress. Many will rely on the ACA Marketplace, potentially paying more out-of-pocket than under a pooled small-group plan.
Indirect costs. Lower morale or higher turnover can translate into recruiting and training expenses.
Key considerations
Employee demographics. Younger, healthier teams may tolerate this; those with growing families typically prefer employer support.
Local labor market. Competing employers offering coverage will have an edge.
Communication. If you choose this path, provide employees clear resources about enrolling in individual plans and eligibility for subsidies.
2. Small Group Health Insurance
What it is
A traditional employer-sponsored group health plan for businesses with 1–49 full-time equivalents.
Usually fully insured (premiums cover risk) or level-funded (a hybrid).
Pros
Shared risk and lower average cost. Pooling many employees can bring more stable premiums than individual plans.
Tax advantages. Employer contributions are tax-deductible, and employee premiums can be pre-tax via a Section 125 cafeteria plan.
Bundled benefits. Many carriers offer dental, vision, life, and disability add-ons.
Cons
Fixed renewal rates. Premiums are community-rated each year and may spike with claims.
Participation requirements. Most carriers require 70–75% employee participation.
Administrative overhead. Open enrollment, carrier invoicing, Section 125 compliance, and ACA reporting (though under 50 you avoid the federal employer mandate).
Implementation steps
Assess your employee census. Gather ages, zip codes, family statuses, and desired benefit levels.
Partner with Tsunami Health. We’ll solicit quotes from multiple insurers and help you compare plan designs.
Set your contribution policy. For example, cover 75% of the employee-only premium.
Establish enrollment logistics. Define your open-enrollment window, qualifying events, and employee communications.
File required notices. Even under 50, some states require annual benefit filings.
3. Individual Coverage HRA (ICHRA)
What it is
An ICHRA lets employers reimburse employees—tax-free—for individual health insurance premiums and qualified medical expenses.
Pros
Cost control. You set a fixed monthly allowance per “class” of employees (e.g., full-time, part-time, geographic).
Flexibility & choice. Employees pick any ACA-compliant individual plan, tailoring coverage to their needs.
Predictable expense. Your maximum liability is the allowances you budget.
Cons
Employee complexity. Your team must shop the individual market, understand plan networks, and submit proof of coverage/reimbursement requests.
Plan maintenance. Employees must maintain individual coverage to receive reimbursements.
Notice & timing. You must notify eligible staff at least 90 days before the ICHRA plan year and coordinate with ACA enrollment periods.
Implementation steps
Design your ICHRA classes. Define groups (e.g., by employment status or location) and assign allowance levels.
Determine allowance amounts. Balance competitiveness against your budget.
Work with Tsunami Health to draft plan documents & notices. We’ll ensure you meet the 90-day notice requirement and IRS guidelines.
Set up administration. Choose an HRA administrator or let Tsunami Health handle claims processing, coverage verification, and IRS reporting.
Educate employees. Provide guides or webinars on shopping the Exchange, enrolling in an individual plan, and submitting reimbursement requests.