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Most entrepreneurs start businesses because they are passionate about their product or service, not necessarily to crunch numbers or manage people. But as their business grows, they must deal with the challenge of providing an attractive benefits package that will help recruit and retain talented workers.
“Small business owners didn't start their companies to manage health benefits,” said Marshall Darr, CEO and cofounder of StretchDollar, which focuses on small business benefits solutions. “I’ve yet to meet a small business owner who enjoys picking which hospitals their employees can go to or which medications they’ll have access to. It’s a complicated and overwhelming task.”
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An increasing number of small businesses are turning to Individual Coverage Health Reimbursement Arrangements, or ICHRAs. This employee benefits plan gives employers a flexible way to provide tax-deductible reimbursements to employees for their individual health insurance premiums. Employees can choose a plan that best suits their needs and budget while offering employers greater control over health care costs and administrative burdens.
ICHRAs offer greater flexibility for employers and employees, allowing for personalized plan choices and contribution amounts. Employers can manage health care costs effectively by setting fixed reimbursement limits. ICHRAs provide tax-free reimbursements for both employers and employees. They also can enhance employee satisfaction by offering more choice and control over health care benefits.
ICHRA use has been growing steadily since 2020. As of 2024, the HRA Council estimates that 500,000 people have ICHRA benefits. Eighty-three percent of employers providing ICHRA benefits didn’t previously provide health coverage to their workers.
StretchDollar on Tuesday announced the close of a series of seed rounds for a total of $6 million of funding, led by Fika Ventures and Oscar Health. The additional capital will support expansion of the company’s self-service platform and further elevate the small business benefits experience, the company said.
“More than 50% of small businesses are unable to offer health insurance to their employees today,” said Mark Bertolini, CEO of Oscar Health. “Many businesses, especially those with less than 50 employees, do not have the resources to weather the skyrocketing costs of employer-sponsored plans. The individual market fills the gap. Employers have an efficient way for employees to purchase health insurance and employees choose the plans that best fit their needs.”
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
