Small business owners often hear about the rising costs of health insurance, with premiums climbing year after year. But there’s a less-known path: group health strategies that cost less than buying individual plans, especially in 2025. What keeps these hidden? Clever marketing—or lack thereof—by the big insurers. Here’s what you need to know, clearly and conversationally, backed by up‑to‑date research and real numbers.

Why Small Business Health Premiums Are Rising

• In the U.S., employers anticipate a 5.8 % increase in fully insured plan costs in 2025, the third consecutive year above 5 % (stretchdollar.com, Reuters).
• Pharmacy costs are surging—outpatient drug trends are projected to rise 11.4 %, the fastest-growing expense in benefits packages (Segal).
• Administrative overhead is heftier for small groups and individual policies—small group admin cost can be above 11 %, versus about 16‑17 % in the individual market (Wikipedia, Wikipedia).
• In Canada, small businesses typically pay $250–350 CAD/month per employee for group coverage, depending on plan type and usage levels (PolicyAdvisor).

These combined cost drivers are forcing small employers to dig deeper into lesser‑known—but often more affordable—group coverage strategies.

 Group vs Individual Coverage Keywords

Small businesses usually choose between:

1. Traditional Group Health Plans

• Employers sponsor a master plan covering all eligible employees.
• Premiums are pooled across participants to reduce per-person cost.
• In Canada, small groups might pay $250–350 CAD/month per-person, while medium or large groups pay less due to scale (PolicyAdvisor).
• In the U.S., employers typically pay ~85 % of premiums for employees and ~75 % for dependents .

2. Individual Coverage + HRA (ICHRAs, QSEHRA)

• Employers allocate a fixed, tax-free dollar amount for employees to purchase individual plans on public marketplaces.
• Employees choose their own plan, creating flexibility and predictability for employers.
• Employer liability is capped; they fund a set amount and avoid the risk of renewal spikes.
• U.S. adoption surged: up 50 % from 2024 to 2025, covering around 450,000 workers nationwide .

Hidden Group Health Plans

There are three often‑overlooked but powerful small‑business options:

1. ICHRAs (Individual Coverage Health Reimbursement Arrangements)

• Allows employers of any size to reimburse employees for individual market plans.
• No federal contribution limits (unlike QSEHRA), and you can tailor reimbursements to employee class.
• Employers gain budget control—pay a fixed amount per person monthly—and shift plan shopping to employees.
• Ideal for small businesses hit by premium volatility or wanting flexible tiering by region/role (carusoins.com).

2. QSEHRA (Qualified Small Employer HRA)

• For employers under 50 full‑time equivalents.
• IRS caps set: up to $6,350 (single) or $12,800 (family) in 2025.
• Tax advantages and defined limits make budgeting easier.
• Best suited for micro‑businesses seeking simplicity .

3. MEWAs (Multiple Employer Welfare Arrangements)

• Small businesses band together under a pooled, self‑funded plan—not fully insured.
• Risks and admin costs shared, enabling access to group‑style pricing that any individual employer couldn’t negotiate alone.
• Can reduce overhead and premium rates if the pool is well managed (Wikipedia).

Why Big Insurers Don’t Promote These

• Traditional insurers profit more from annual renewals and premium hikes than fixed‑budget models.
• Group models like ICHRA and QSEHRA reduce volatility, lowering insurer churn and often sidelining re‑underwriting.
• MEWAs reduce insurer dominance by enabling self‑funded models outside the standard risk pool.

Table: Cost Comparison 2025

Real Benefits Small Business Owners Miss

Better Cost Predictability

With ICHRA or QSEHRA, you always know your maximum monthly outlay. No nasty surprises at renewal time.

Tax Efficiency

Both arrangements offer pre‑tax tax‑free reimbursement, and contributions are fully deductible as a business expense in the U.S. and Canada (subject to local rules).

Employee Choice and Satisfaction

Employees can choose plans that better fit their needs and networks. This is especially useful if your workforce is spread across multiple U.S. states or Canadian provinces.

Attract and Retain Talent

According to recent data, 79 % of Canadian employees prefer benefits over a pay raise, and U.S. surveys show similar sentiment. Group-style benefits make your business more competitive in hiring and retention .

How to Research These Options

1. Understand your workforce:
   • U.S. employers should check their FTE count to determine eligibility for QSEHRA (<50 FTE).
   • Consider employee locations (states/provinces) since plan availability and premium differences vary.
2. Work with brokers or platforms:
   • Many platforms specialize in setting up ICHRA or MEWA plans and guiding employees through plan selection.
   • They can compare small-group plans vs. individual marketplace plans side by side.
3. Review cost benchmarks:
   • In Canada, average group premiums for small firms are around $250–350 CAD/month per person in 2025 .
   • In the U.S., average premiums for single coverage are around $6,690/year, with employees paying ~$5,714/year of that share (Wikipedia).
4. Compare the total cost:
   • Example: A micro-business with 10 employees can run a QSEHRA budget at up to $63,500/year (10 × $529/month) and compare this with group plan quotes.

Embedded Resource for Further Reading

To dig deeper into how small business HRAs compare across states and plan types, check out this .

Another practical guide that outlines cost-saving strategies for employers in 2025 is this [Employer’s Guide to Cutting Group Health Insurance Costs], covering everything from pharmacy reduction tactics to plan design tweaks (groupbenefits.com).

Step-by-Step: How to Unlock Hidden Savings

1. Run a cost baseline:
   • Gather current group plan premiums, deductibles, and employer contributions.
   • Compare against estimates for individual plans plus reimbursed budget (ICHRAs/QSEHRAs).
2. Segment your employees:
   • Use ICHRA to group by geography, part-time vs full-time, or other classifications.
   • Offer tailored reimbursement levels per class for precision funding.
3. Model worst- and best-case scenarios:
   • Worst case: employees pick high-premium individual plans.
   • Best case: employees choose bronze or silver plans where reimbursement covers 100 %.
4. Evaluate administrative overhead:
   • ICHRA platforms automate reimbursement and plan selection.
   • QSEHRA has lower admin impact; MEWA requires compliance infrastructure but can reduce per-person cost.
5. Pilot with a small cohort:
   • Try HRAs for a subset of employees before converting the whole workforce.
   • Use feedback to refine contribution levels or plan guidance.

Final Thoughts: Why These Options Are Hidden—and Why They Matter

Big insurers rarely push ICHRA, QSEHRA, or MEWA models because they disrupt the traditional cycle of annual premium increases and underwriting. Small businesses that don’t know about these tools often feel stuck: premiums for group or individual plans just keep going up, and policies become less generous each year.

By contrast, these lesser-known group‑style strategies offer:

• Control: employers cap cost,
• Choice: employees personalize coverage,
• Simplicity: transparent pricing,
• Savings: often below individual and traditional group rates in 2025.

Adopting them doesn’t require sacrificing quality—in fact, they empower employees while keeping budgets predictable. If you’re running a small business in the U.S. or Canada in 2025, it’s time to lift the curtain on what big insurance doesn’t advertise: smarter, cost‑effective group alternatives that make clear financial sense.

Whether you’re paying out hundreds per person each month or just struggling to keep premiums in check, understanding and deploying hidden group health plans like ICHRA, QSEHRA, or MEWA could cut thousands of dollars from your benefits spend—without cutting benefits. Time to talk to a benefits advisor or platform that specializes in these tools and see how they stack up for your specific business.

Thanks for reading!