The lights in Lisa’s daycare had just gone out for the day, but her mind was still running. She had spent the day juggling staff schedules, comforting toddlers, and talking with parents about next week’s activities. Now, at her desk, she stared at the renewal terms for her company’s group health insurance plan and felt her stomach tighten.
Premium costs were climbing again. Lisa wanted to keep good health benefits in place for her 10 employees, but every year it seemed harder to balance the numbers. A colleague had recently suggested an ICHRA, a type of health reimbursement arrangement, as a cheaper alternative to traditional health benefit plans. The idea sounded simple to her. Rather than buy a plan, Lisa would give each employee an allowance and let them buy their own plan.
It seemed like a quick fix for her cost control while giving the employees more control over their individual health insurance choices. But then she thought about her team. What kind of coverage would they end up with? Would they feel supported, or would it look like she had taken something away from them?
Three Things You Need To Contemplate Right Now
If you're in a time crunch, there are three key items you need to understand. Use these links to get to them now.- The Real Employee Experience With An ICHRA
- Why A Group Health Plan Still Wins
- Costs To Employer vs Value To Employee
If you want to dig deeper, you can read on or skip to the FAQs at the bottom of the page.
The Real Employee Experience with an ICHRA
On the surface, an Individual Coverage Health Reimbursement Account (ICHRA) seems appealing for small business owners. The employer controls their healthcare costs at a fixed dollar amount, and employees shop for their own health insurance coverage. But Lisa quickly learned what that meant in practice in Texas.
Most employees in Texas who get an ICHRA end up on an ACA exchange plan. And those Affordable Care Act plans come with frustrations more frustrations than you can shake a stick at.
The provider networks are narrow to almost non-existent. That means your employees often have to switch doctors, drive farther for care, or just go without seeing a doctor. Out-of-pocket costs can be steep, especially for plans with lower premiums. When an employee needs care, they may feel like they've been taken advantage of when the final bill comes in.
Lisa thought about her daycare teachers, many of whom are already stretched every paycheck. Forcing them onto restrictive plans with unpredictable bills would not feel like a benefit. It would feel like she had passed the problem to them. That was not the kind of leader she wanted to be.
Why a Group Health Plan Still Wins
When Lisa compared her ICHRA option with the group health insurance plan she already had, the difference in employee experience was clear. She wondered how a more basic health plan would compare.
When she began to look at "basic" employer health insurance plans, they offered better networks than the individual market would provide her team. That meant her employees could actually keep their doctors and get medical care without hassle.
Group health insurance plans also came with more predictable costs when you use them. Deductibles and co-pays were easier to understand and manage. Especially when you don't have to worry about out of network benefits as well. Instead of worrying about massive out-of-pocket surprises, her staff could budget around their care. That kind of stability matters to people who depend on consistent paychecks.
Lisa realized her employees would value the group plan more than they would an allowance for the marketplace. It gave them confidence that she was investing in them, not just cutting corners. That confidence builds trust, and trust keeps good employees from walking away.
Costs to Employer vs. Value to Employee
Lisa wanted to do one last check and dug into the health insurance premiums and expected to see a big savings compared to the ICHRA. But once she looked closer, she realized the difference wasn’t nearly as large as she thought.
The allowance she would have needed to provide under an ICHRA still had to be competitive with individual market premiums. And those premiums are expected to rise again in 2026. That meant her staff would end up paying more for coverage that gave them less.
When she compared that to her small group plan, the net cost to her as an employer was only slightly higher. But the value her employees received was much greater. They had stronger networks, lower out-of-pocket costs, and a sense of stability that matters.
Lisa came to see the group plan not as a financial burden, but as a tool to keep her daycare fully staffed and her team loyal in the tight Texas labor market. In today’s Texas economy, benefits like that are worth every penny.
Finding the Better Path
Lisa’s research started as a search for savings. She wanted relief from the pressure of yearly premium increases. But as she walked through her options, she realized the real decision was about more than dollars. It was about her people and making sure that they could afford the medical expenses that come their way.
An ICHRA might have made her budget look cleaner, but it would have left her employees frustrated with restrictive health plans and higher healthcare costs. A group plan gave them a better experience, better cost predictability, and reminded them that their employer valued them.
By sticking with a group plan, Lisa chose stability, loyalty, and a benefit her employees actually appreciated. It was not the cheapest option on paper, but it was the smarter one for her business.
Protect Your Team and Your Business
If you are a Texas small business owner wondering if an ICHRA is the right move, take a step back and think about the people who work for you. Their experience matters. Group health insurance policies may cost slightly more, but it often delivers far more value to the team that fuels your business. In a competitive labor market, that value can be the difference between keeping your team and losing them.
At Insurance For Texans, we help daycare business owners like Lisa weigh the real-world trade-offs. We walk through the numbers, explain the employee experience, and help you choose the path that works for your business and your people.
Click the button below to see why a group health plan may be the better move for your employees and your business as you prepare for 2026.