10 Questions Every HR Team Should Ask Before Choosing a Health Plan

Every fall, HR teams sit down with a renewal quote and a deadline. The easy move is to just re-up whatever the company had last year. That’s a mistake.

The health plan options employers can offer their employees have multiplied well beyond a single fully insured group plan—self-funded, level-funded, and HRA-based approaches like Individual Coverage HRAs (ICHRA) and Qualified Small Employer HRAs (QSEHRA) are all realistic paths now. Each one carries a different mix of cost, risk, and compliance obligation. Picking wrong doesn’t just mean overpaying. It can mean tripping an Affordable Care Act (ACA) requirement you didn’t know applied to you. Before signing anything, run the decision through these 10 questions.

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What plan structure fits your company’s size and budget?

Four structures dominate the market right now: fully insured small group, self-funded, level-funded, and HRA-based models built on ICHRA or QSEHRA. Company size and cash flow usually point toward one over the others faster than any feature comparison will.

Smaller employers tend to gravitate toward fully insured or HRA models because the costs are predictable month to month—you know the bill before it arrives. Larger groups, with enough employees to generate stable claims data, often have the volume needed to make self-funding worth the added risk. Neither is universally “better.” The right fit depends on how much financial variance your organization can absorb in a bad year.

Should you choose a fully insured or self-funded plan?

Fully insured plans trade cost savings for certainty. You pay a fixed premium, the insurer assumes the claims risk, and your monthly budget doesn’t move regardless of how expensive a bad flu season turns out to be. Self-funded plans flip that arrangement: the employer pays claims directly (often through a third-party administrator), which lowers costs substantially over time—but only if claims stay manageable.

Stop-loss insurance is the safety valve most self-funded employers lean on. It caps how much the company is on the hook for above a set threshold, so one catastrophic claim doesn’t blow up the budget. Ask any broker pitching a self-funded plan how their stop-loss coverage is structured before you sign.

Where level-funded plans fit in

Level-funded plans split the difference. Employers still take on claims risk, similar to self-funding, but pay a fixed monthly amount that smooths out the swings—closer to a fully insured experience without the fully insured price tag. Adoption has grown fast: level-funded plan uptake among small employers rose from 13% in 2020 to roughly 40% by 2023, according to Kaiser Family Foundation data—a shift that benefits brokers are now watching closely. If your team hasn’t asked a broker about level funding yet, raise it before the next renewal.

Could an ICHRA or QSEHRA work better than a group plan?

Individual Coverage HRAs and Qualified Small Employer HRAs skip the group plan structure entirely. Instead of sponsoring one plan for everyone, the employer sets a monthly allowance and reimburses employees tax-free for individual market coverage they choose themselves.

The eligibility rules differ in a way that matters for planning. QSEHRA targets small businesses: it caps eligibility at employers with fewer than 50 full-time equivalent employees. ICHRA has no size cap at all, which makes it viable for a 15-person company and a 1,500-person company alike. For employers with a geographically distributed or highly varied workforce, letting employees pick their own plan solves network problems a single group plan never could.

What will this plan really cost you and your employees?

The premium quote is the easy number. The real cost of ownership includes the employer contribution level, deductibles, and out-of-pocket maximums, and those numbers can make an attractive premium look a lot less attractive once an employee actually files a claim.

Context helps here. The average family premium reached $26,993 in 2025, a 6% increase from the year before—so if a quote is running well above or below that benchmark, it’s worth asking why. For a deeper breakdown of what’s driving average employer healthcare costs higher, it helps to see where the money actually goes before comparing quotes side by side.

Does the provider network cover where your employees live?

Network adequacy gets overlooked more than it should, especially for teams with remote employees or offices spread across multiple states. A plan can look excellent on paper and still leave a chunk of the workforce with no strong in-network options nearby.

Narrow networks are the quiet cost of an attractive premium. Employees end up going out-of-network for care they can’t find locally. That cost—often invisible in the renewal conversation—shows up later as frustration, unexpected bills, or both. Before finalizing a plan, check network coverage against where your employees actually live, not just where the company is headquartered.

Is the plan compliant with ACA and state requirements?

This is the section where a wrong assumption gets expensive. ACA affordability and minimum value requirements apply to applicable large employers. Getting either wrong triggers a penalty under Section 4980H—one that just went up. For 2026, the IRS raised the 4980H(b) penalty to $5,010 per full-time employee who receives subsidized coverage through an exchange, a $660 increase from 2025.

State requirements add another layer. Several states now run their own individual mandates that carry employer reporting obligations on top of federal ones. And regardless of which plan structure you land on, Forms 1094-C and 1095-C reporting doesn’t go away—build that into your compliance calendar now, not in December.

How will this plan affect recruiting and retention?

Health benefits function as compensation whether or not the offer letter frames them that way. Plan generosity, the employer contribution level, and dependent coverage all shape how a candidate weighs one offer against another. Current employees notice when a competitor’s benefits outpace yours.

Benchmarking against competitors in your industry and region is worth doing before renewal season, not after you’ve already lost a candidate to a better package. A plan that saves money on paper but quietly weakens your offer is not actually the cheaper option.

What support will employees get to use their benefits?

Choosing a plan is only half the job. Even a strong plan fails employees who don’t know how to use it—finding an in-network provider, understanding a deductible, figuring out whether a specialist visit needs a referral. Coverage on paper and coverage employees can actually navigate are two different things.

A growing number of employers now layer a decision-support tool on top of whatever plan they’ve chosen. Platforms like Garner Health focus on helping employees find high-value providers instead of leaving them to guess. That guidance matters most in exactly the plans—self-funded, level-funded—where cost control depends on employees actually making informed choices about where they get care.

How predictable are costs over multiple renewal cycles?

A quote is a snapshot. What happens in year two, after a single high-claims year, is the real test of a plan’s cost structure. Self-funded and level-funded plans in particular can see steep premium swings following a bad claims year. Employers who didn’t ask about renewal protections upfront are the ones who get hit hardest.

Ask brokers for rate caps or renewal protections before signing, not after a bad year forces the question. And ask for multi-year renewal history from any vendor, not just the number on this year’s quote—a plan with a rough track record over three years tells you more than a single competitive first-year rate.

What administrative work comes with this plan choice?

Every plan type comes with a bandwidth cost. It’s rarely distributed evenly. Self-funded and HRA-based models tend to demand more hands-on administration—claims oversight, reimbursement tracking, and ongoing compliance filings—than a standard fully insured group plan requires.

For a lean HR team already stretched across a dozen other priorities, that difference matters as much as the premium does. A third-party administrator or benefits broker absorbs a lot of that burden—pricing that support into the decision instead of discovering the workload after the plan is already alive.

Choosing the health plan that’s right for your team

None of these 10 questions works in isolation. Cost predictability, compliance risk, network fit, and the support employees get to actually use their coverage all belong in the same conversation—not stacked in order of which one is easiest to answer first.

Plan needs shift as headcount grows, offices spread across new states, and claims experience changes year over year. A structure that made sense at 40 employees might not fit at 150. Put these questions back in front of your team every renewal cycle, not just the year something goes wrong.