Cost-Effective Health Plan Coverage Strategies for Growing Businesses: Making Sense of ICHRA, MEC, RBP, and Traditional Insurance

Offering competitive and compliant employee health insurance is one of the top expenses and challenges for small and midsize business owners.

Navigating through all the options available to provide impactful benefits that resonate across multiple generations of your workforce, while facing rising premiums has become more complex every year.

The good news? You have more choices today than ever before to support your employees without increasing your expenses.

From flexible reimbursement models to lean compliance-focused plans to transparency-first pricing strategies, you have more than one option of traditional group insurance. Each approach comes with its own pros and cons—and understanding those trade-offs is key to making the best decision for your business and your employees.

Group Health Plan Coverage Comparison Chart

ICHRA: Flexibility Without Full Group Coverage

Why employers choose ICHRA:

The Individual Coverage Health Reimbursement Arrangement (ICHRA) lets you set a budget and reimburse employees tax-free for health plans they buy themselves. It’s especially appealing if you want to offer health benefits but don’t want to manage a group policy.

Benefits to your business:

• • Predictable costs—you decide how much to contribute.
  • Satisfies ACA employer mandates when designed properly.
  • Employees have the freedom to choose plans that fit their individual or family needs.

What to be aware of:

• • Employees who accept the ICHRA can’t receive ACA marketplace subsidies.
  • It requires a good administrative setup to manage reimbursements and compliance.
  • Not all employees are comfortable navigating the individual market on their own.

Best fit for:

Companies with geographically dispersed teams or diverse employee needs who value flexibility and cost control.

MEC: Minimum Coverage, Maximum Compliance

Why employers choose MEC:

MEC (Minimum Essential Coverage) plans are a budget-conscious way to meet ACA requirements and avoid costly penalties. These plans cover essential preventive services but are not designed to cover broader medical needs.

Benefits to your business:

• • Extremely affordable compared to full medical plans.
  • Keeps your business compliant with ACA employer mandate rules.
  • Easy to implement with minimal complexity.

What to be aware of:

• • Coverage is limited—most employees still need another health plan for real peace of mind.
  • Employees may feel disappointed if they expect a traditional health insurance experience.

Best fit for:

Employers focused on compliance and offering something—however minimal—on a tight budget. Often used as a foundational layer in industries with high turnover or hourly staff.

RBP: A New Way to Fight Health Cost Inflation

Why employers choose RBP:

Reference-Based Pricing (RBP) skips traditional insurance networks and instead reimburses healthcare providers based on a multiple of Medicare rates. This approach aims to bring fairness, transparency, and long-term sustainability to employer-sponsored plans.

Benefits to your business:

• • Often 20–40% cost savings compared to PPO plans.
  • Predictable pricing structure for common procedures and services.
  • Transparent claims process and reduced reliance on carrier-negotiated rates.

What to be aware of:

• • Some providers may not accept RBP payments, leading to balance billing (charging the employee the difference).
  • Requires a strong partner to manage member advocacy and resolve billing disputes.
  • May create confusion or concern among employees without proper education.

Best fit for:

Businesses that are ready to challenge the status quo, want pricing transparency, and are comfortable with a more hands-on approach to employee education and support.

Traditional Group Insurance: Familiar, But Expensive

Why employers stick with traditional fully insured group insurance:

For decades, fully insured group plans have been the default option for employer-sponsored health benefits. They're familiar, relatively turnkey, and come with access to national provider networks.

Benefits to your business:

• • Easier employee adoption—most people understand how it works.
  • Broad networks and more comprehensive coverage.
  • Streamlined admin when bundled with other benefits.

What to be aware of:

• • Cost is the biggest downside—premiums rise nearly every year.
  • Less flexibility for tailoring benefits to different employee groups.
  • You may be paying more than necessary to provide the same value another way.

Best fit for:

Companies with generous budgets or risk-averse leadership who prioritize ease and employee satisfaction over cost savings.

Let’s Find the Right Fit—Together

Whether you're rethinking your benefits strategy or looking to offer coverage for the first time, we’re ready to help you make sense of your options and find a solution your employees will appreciate—and your bottom line will support.

Let’s talk. We’ll walk you through the pros and cons and help you build a custom strategy that works.