Pool and spa companies that offer health insurance have seen their costs rise steadily
for years, and 2025 will be no exception. Health
insurance premiums are expected to increase
by some 8% in 2025, according to a new survey from the
International Foundation of Employee Benefit Plans (IFEBP).
That comes off a 7% price hike in 2024. The average annual
premium for family coverage now tops $25,572, as tracked by
KFF, a consultancy.
What’s driving the price escalation? Catastrophic claims,
specialty prescription drugs, and chronic medical conditions.
“A cancer or a musculoskeletal diagnosis can result in a
strong expense impact on any employer’s health insurance
plan,” says Julie Stich, vice president of content at the IFEBP.
“So can chronic conditions such as diabetes or hypertension.”
A host of new specialty medications top things off. “About a
third of respondents to our recent survey reported that they
now cover GLP-1 drugs for weight loss as well as diabetes.”
Companies have long tried to control costs by getting
workers to pick up more of the tab. Figures in a new KFF
report, though, suggest that employers are putting less faith
in cost-shifting tactics. While premiums for family coverage
increased 24% over the past five years, employers have hiked
worker contributions to those premiums by only 5% over
the same period. Deductibles, for their part, have risen only
8% over the past five years. And copays and coinsurance
payments in 2024 were no higher than the previous year.
It’s no secret why employers are reluctant to load more
costs onto workers’ shoulders. “Benefits are a big piece of
total compensation,” explains Walter Winter, senior vice
president of employee benefits for Woodruff Sawyer, an
independent insurance broker. “The employer who just keeps
cost shifting is going to end up
with a workplace less and less
attractive to employees and
job candidates. Retention and
recruitment may suffer.”
NEW INITIATIVES
Perhaps the most helpful initiative
for the small businesses of
the pool and spa industry is the further expansion of a fairly new
insurance vehicle called the Individual
Coverage Health Reimbursement
Arrangement (ICHRA, pronounced
“ICK-ra”). Introduced in 2020 by the
first Trump administration, these
arrangements allow employers of
any size to reimburse participants for
the premiums they pay for a health
insurance plan of their choice. Employer
reimbursements are tax deductible, and
employees receive them tax-free.
“An ICHRA is like a 401k plan for
healthcare,” says Jack Hooper, CEO and
co-founder of Take Command Health,
a provider of health reimbursement
arrangements (HRAs). “Each employee
can put money towards a high-quality
ACA plan that has their doctors and
prescriptions covered. It’s a win-win
where employees are going to enjoy
more value, and the employer is saving
money.”
ICHRAs have been popular with
employers, increasing in usage by
some 29% in 2024 over the previous
year, according to the HRA Council, a
consultancy. A big reason is the flexibility
they bring to the buying process. In the
traditional shopping process, employers
will attempt to control overhead costs
by finding a one-size-fits-all health
insurance plan suitable for their diverse
employee pool. Too often, that leads
to overbuying, burdening the business
with a plan that meets the needs of the
management level staff but is far too
costly for field level workers. And when
only the sickest members of the latter
group sign up for the insurance, the
result is an adverse selection that sends
costs into an upward spiral.
ICHRA puts a stop to that, since
employers no longer need to find one
plan that satisfies everyone. Too, a
business need not have a huge pool
of workers to benefit. “ICHRAs can be
used by the very smallest of employers,
who traditionally have had trouble
finding good rates and who are tired of
negotiating renewals every year,” says
Hooper.
Despite their limited history, ICHRA
plans have proven themselves capable
of expanding coverage: Some 83% of
employers adopting them report they
are offering health insurance to their
workers for the first time, according to
the HRA Council. And self-sufficient
shopping habits are part and parcel of
the new people entering the workforce.
“Younger workers seem to be just fine
with going to private health providers,
comparing different rates, and then
getting reimbursed,” says Alexandra Ray,
benefits manager at consultancy Flex
HR.
ICHRAs are just one of a variety
of HRAs with which employers can
fashion health insurance programs
that meet diverse needs. Organizations
still seeking more flexibility can add
an HRA as an adjunct to, rather than
a replacement for, their current plans.
“You can be very flexible and creative
with how you construct HRAs,” says
Winter. “One of our clients wanted
to add orthodontia to their dental
plan. When they discovered very few
employees would utilize the coverage,
they decided that the increased
premium quotes were too high for the
expected benefit. They ended up setting up an HRA to cover orthodontia only.”
Trump 2 may also see a revival of
interest in association plans that allow
a consortium of employers to pool
workers into one large buying group.
The previous Trump administration
had championed such plans as a
way for employers to enjoy lower
premiums. The Biden administration
denigrated them, citing their tendency
to default and leave beneficiaries
without coverage. Trump 2 may well
revisit the topic, under a new regulatory
framework to better bolster their
financial strength.
CUTTING COSTS
Employers can also take these steps
to stem the rising tide of health care
expenses:
- Schedule early care
“Identifying medical issues early
means treatment can start without
delay, and that can translate into
lower costs,” says Mike Barton, chief
growth officer, employee benefits, at
World Insurance, a broker. “Employers
should consider incentivizing workers
with gift cards or time off to visit their
physicians for routine preventative
care, immunizations and screenings.”
- Encourage telehealth
One-to-one video conferencing over a
smart phone costs a lot less than inperson
appointments. Employers need
to work with their plans to ensure that
telemedicine is employed as often as
possible.
- Shift costs
While traditional cost shifting
tactics are losing their punch
as tools for capping costs, they
remain an important piece of the
health insurance puzzle. “We never
recommend an employer pay 100%
of their insurance costs,” says Steve
Kelly, partner at AZ Health Insurance
Brokers. “That can result in employees
over-using their benefits, which drives
up costs for everyone.”
- Communicate value
“It can be helpful to include a statement
on employees’ pay stubs about how
much the company is paying for health
insurance,” says Ray. “That can open a
lot of people’s eyes about the value they
are receiving from their employer.”
SELLING THE STAFF
Retooling a company’s health insurance
plan is one thing. Selling it to the
employees is another. “Employers need
to avoid rolling out a new plan in a way
that makes people feel they’re losing
existing coverage,” says Amy Skinner,
director of content and brand marketing
at Take Command Health. “Instead,
say something like, ‘We are replacing
the plan that you were only lukewarm
about, with a new vehicle that gives you
exactly what you want.’ That’s a powerful
message that will get employees
excited.”
The calendar must also be used to
your advantage. The more alternatives
being offered to employees, the more
time and hand-holding the transition will require to avoid an emotional blowback.
“Allow yourself enough runway to make
a change,” says Skinner. “Give your
employees enough resources to make
informed decisions on the new health
plans. Without that, it’s all too easy for
people to get frustrated and end up
signing up for a plan that doesn’t meet
their needs.”
Health insurance remains a
patchwork of partial solutions that
employers must stitch together as best
they can. The right mix of benefits will
ensure better coverage for employees
while capping escalating costs. And
those costs need to be managed like any
other business account.
Change, bluntly, is afoot. “If we
continue to do what we’ve been doing,
the cost of health insurance will continue
to rise unabated,” says Barton. “We have
to do things differently. The only way to
reduce the cost of health insurance is to
reduce the cost of healthcare.”
This article first appeared in the April 2025 issue of AQUA Magazine — the top resource for retailers, builders and service pros in the pool and spa industry. Subscriptions to the print magazine are free to all industry professionals. Click here to subscribe.
