Should you break up with your group health benefits?
If you’re unhappy with your group plan or just curious about other options, here are some considerations for moving on and why an HRA might be better for your business.
In this article
The origin story of health benefits
As a way to control inflation during World War II, the federal government froze wages.¹ As a responsive measure, employers started offering “fringe benefits” to attract employees. This included health insurance, and the cost was negligible. In 1950, employer contributions for group health coverage was 0.5% of the employee’s compensation. But what began as a nominal cost has skyrocketed, making it a major P&L drain for employers.
| Year | Employer costs for group health insurance² |
| 1950 | 0.5% of employee compensation |
| 1980 | 3.7% of employee compensation |
| 2010 | 7% of employee compensation |
| 2025 | 9% of employee compensation³ |
Employer costs have outpaced inflation and compensation, making group health plans a budget concern. Since 1999, employer health insurance costs have tripled relative to employee pay.4
Since 1999, employer health insurance costs have tripled relative to employee pay.
The pain points of group health insurance
Because group health insurance has long been the default option, many businesses have used it but struggled with the costs. What started as a convenient way to provide health benefits has become an expensive, unsustainable burden.
High costs: In addition to the gradual cost increases over time, astronomical rate hikes have become the norm for group health insurance carriers.5
Unpredictability: Those rate hikes aren’t predictable, so a business isn’t able to plan their budget or forecast revenue, affecting not just benefits but business overall.
Participation requirements: If employers don’t meet participation requirements, a carrier can refuse to offer certain plan types or cancel the policy; the IRS can also impose a fine or tax penalty.
Employee dissatisfaction: Group benefits offer a single option: a one-size-fits-all plan. That means whether an employee is 25 or 50, healthy or sick, they all get the same coverage. When forced into one mold, employees can be dissatisfied or even choose to leave.
In 2025, employers paid nearly three times more than employees did for family coverage.
Read: Double digit renewals & risk don’t have to come with the territory
Steps for evaluating your group insurance
Step 1: Determine the pros and cons of your group health insurance carrier. What’s working? What’s not? What do you want to be different? Talk to staff, HR, and finance for feedback.
Step 2: With that insight in place, run a cost/benefit analysis of your group plan. If you’re working with a broker, this is a great time to engage them.
Step 3: Review your contract for termination clauses, so you’re aware of your timing options should you decide to switch group health insurance.
Step 4: If you’re considering an HRA to replace your group plan, take our HRA quiz to find out what would work best for you, use our tax-savings calculator, and learn about HRA special enrollment periods, including mid-year plan changes. You can also connect with an HRA specialist to talk through your questions.
What is an HRA?
A Health Reimbursement Arrangement (HRA) is a tax-advantaged health benefits solution where employers give a monthly allowance to employees for qualified medical expenses and insurance premiums. The employer sets the budget, and the employees buy healthcare plans from the ACA or state marketplace.
A cost-controlled alternative to group health plans
A Take Command HRA is a modern benefits model for America’s most people-focused industries
Many employers are looking for options outside of group health insurance but are unsure of the choices (or if there are any). A Take Command HRA is a cost-controlled alternative to group insurance that takes a completely different approach. It’s a modern health benefits model that allows employers to provide cost-effective, flexible, personalized coverage.
Benefits of a Take Command HRA
Budget control: With a Take Command HRA, you set the budget. No surprise rate hikes, no renewal jumps. You choose the allowance to give employees each month, and it only changes if and when you want it to. That means you control your costs down to the penny, and you can forecast with 100% accuracy.
Employee choice: An HRA is designed for employees to choose the health plan they want. It’s not a hassle—it’s intended that way. A 25-year-old can buy a high-deductible plan and a 50-year-old can buy one with a lower deductible. There is complete flexibility for everyone to get what works best for them.
Streamlined process: Our HRA administration platform streamlines processes and reduces paperwork, making it a win for admin. Your HR team no longer has to choose the group plan, and they can rest assured that compliance and regulation are handled. It gives your hardworking team room to breathe and focus on other priorities.
Flexible options: Take Command has HRAs for small businesses, mid-market companies, and enterprise corporations. Each option satisfies regulatory requirements for health insurance. In addition to options for every size business, you can also use employee classes to designate unique allowances for different employee groups.
Engaging your broker
Take Command works with thousands of health insurance brokers throughout the U.S. If you’re working with a broker, we’re happy to speak with them about whether an HRA would be a good fit. You can pass along our broker toolkit or ICHRA for brokers.
Keep reading
The new benefits alternative to group health insurance
Group health insurance doesn’t work for every company. If you’re seeing big increases year over year, you’ve got a risk problem. Luckily, there’s an easy alternative to group plans that provides modern, personalized benefits without the unpredictability and lack of control.
Double digit renewals & risk don’t have to come with the territory
Special Enrollment Periods and ICHRA make signups easier
One of the benefits of ICHRA is that it triggers a special enrollment period (SEP), which means an employer can adopt an ICHRA plan at any time of the year and their employees will be able to enroll in a qualifying plan immediately instead of waiting for the next open enrollment period.
HRA special enrollment periods and mid-year plan changes
For brokers: why your clients should reconsider group health plans
Did we mention that health insurance can be confusing and frustrating? It keeps HR up at night and is the P&L line item CFOs dread. Take Command is here to change that.
Out with the old, in with the ICHRA
Contact Take Command to learn about switching your group health plan
References
- https://www.ebsco.com/research-starters/history/emergency-price-control-act-1942
- https://www.brookings.edu/articles/effects-of-employer-health-costs-on-the-trend-and-distribution-of-social-security-taxable-wages
- https://www.bls.gov/news.release/pdf/ecec.pdf
- https://news.rice.edu/news/2025/study-finds-employer-health-insurance-costs-have-tripled-relative-employee-pay-1999
- https://www.kff.org/health-costs/annual-family-premiums-for-employer-coverage-rise-6-in-2025-nearing-27000-with-workers-paying-6850-toward-premiums-out-of-their-paychecks/
