Should I switch to an ICHRA, go level-funded, or join a PEO when my renewal goes up?

The five usual answers to a renewal increase change different things. An ICHRA ends the group plan for the employees who get it. Level-funded keeps a group plan priced off your claims. A PEO splits employer duties by contract. With a higher deductible or a bigger employee premium share, the plan stays and more cost moves onto your people.

What happens if I switch to an ICHRA?

An ICHRA is an individual coverage health reimbursement arrangement. Instead of buying one group plan, you set a monthly amount and reimburse employees for individual policies they buy on their own. Your broker can still help you set the amounts and decide which types of employees get the offer.

What happens to your group plan

For the employees you move to the ICHRA, it ends. HealthCare.gov (checked September 11, 2026) says:

“You can’t offer the same type of employees a choice between a traditional group health plan and an individual coverage Health Reimbursement Arrangement.”

You can offer different things to different types of employees, but inside one type it’s one or the other.

What happens to your employees

Each one shops for an individual policy and puts your monthly amount toward it. The same HealthCare.gov page: “To use the funds, employees must have their own individual health insurance plan (like one from the Marketplace).”

If your company is large enough for the ACA’s employer rules to apply, the offer also has to count as affordable. HealthCare.gov puts the 2026 test this way: the employee’s monthly cost for the lowest-cost self-only Silver plan in their area, after your reimbursement, has to be less than 9.96% of a month’s household income.

The HRA Council, via PR Newswire (August 12, 2026), counts more than 20,000 US businesses offering an ICHRA or QSEHRA in 2026, reaching at least 500,000 employees.

Two things worth knowing before you decide: what your people would pay for a policy in your county, and who administers the arrangement and what happens to reimbursements if that administrator ever changes.

An ICHRA is one kind of HRA. If you want the wider comparison, how a MERP, an HRA and an FSA compare is on its own page.

What happens if I go level-funded?

Level-funded is still your company’s plan, so what your employees see doesn’t change much. What changes is how it’s priced and who carries the claims. OneDigital (June 3, 2026) describes it as:

“a fixed monthly premium based on your team’s actual claims profile, with stop-loss insurance to protect against large unexpected claims and a potential year-end refund if claims run lower than projected.”

What happens to your group plan

It stays, but it’s now priced off your own people’s claims instead of a broad risk pool. Stop-loss insurance sits behind the plan for the large unexpected claims, and if the year’s claims come in under what was projected, some money can come back. OneDigital says these plans suit employers with “a relatively healthy workforce, generally 5 to 200 employees.” What the renewal looks like after a rough one is the question to put to your broker.

What happens to your employees

Day to day, not much. From where they sit it’s still your company’s plan.

What happens if I join a PEO?

A PEO is a different kind of answer. You’re changing who holds which employer duties. NAPEO (checked September 11, 2026) defines the arrangement this way:

“Co-employment is a contractual agreement between a company and a PEO that allocates and divides employer responsibilities.”

What happens to your group plan

Health coverage is one of those responsibilities, so where your plan lands is written in that agreement, which is why the coverage section is the first page to read.

What happens to your employees

They keep working for you, on your product, under your direction. NAPEO says the client company “retains responsibility for and manages product development and production, business operations, marketing, sales, and service.” What moves to the PEO side is whatever the contract puts there.

What happens if I raise the deductible?

Raising the deductible keeps the plan and the carrier. It moves more of the cost to the person getting care before the plan pays. Go far enough and the plan meets the IRS definition of a high deductible health plan, which can pair with a health savings account.

What happens to your group plan

It stays. The trade your broker is describing is a lower premium in exchange for a higher deductible. The IRS set the 2026 lines in Rev. Proc. 2025-19 (May 1, 2025): a high deductible health plan needs a deductible of at least $1,700 for self-only coverage or $3,400 for family coverage, with out-of-pocket costs (not counting premiums) capped at $8,500 and $17,000. The same notice caps 2026 HSA contributions at $4,400 for self-only and $8,750 for family coverage.

What happens to your employees

They pay more of their own care costs before the deductible is met. With a high deductible health plan they can put money into an HSA up to those limits, but whether your people have the cash flow to do that depends on what they earn.

What happens if I shift more premium to employees?

Shifting more of the premium to employees is the simplest move and the one that shows up first on a paycheck. KFF (October 22, 2025) reported that family premiums for employer coverage reached $26,993 in 2025, with workers paying $6,850 a year toward family coverage and the employer paying the rest. Every point you move changes that split.

What happens to your group plan

Nothing changes: same plan, same carrier, same network. The only line that moves is the split between what the company pays and what employees pay.

What happens to your employees

Their take-home pay drops by the amount you move, and they see it on the next check. Check the new split against what your people earn before you decide.

Which of these options keeps my group plan?

If the comparison on your desk is ICHRA versus level-funded, one question settles a lot: level-funded keeps a group plan, and an ICHRA replaces it with individual policies. If it’s a PEO versus your own group plan, the answer is in the co-employment contract. Your broker is the person who can put real numbers on each one for your group.

Is there an option the checklists skip?

There’s one more option that rarely makes the list: keep the plan you have, keep your broker, and recover payroll tax, which is what simerp.com/renewal walks through. The rest of what lowers the plan you keep is on its own page.

References

• HealthCare.gov (CMS), “Individual coverage Health Reimbursement Arrangements (HRAs),” checked September 11, 2026. https://www.healthcare.gov/small-businesses/learn-more/individual-coverage-hra/
• HRA Council via PR Newswire, “Strong ICHRA Growth Among Large Employers Strengthens ACA Marketplace and Risk Pool, HRA Council Report Finds,” August 12, 2026. https://www.prnewswire.com/news-releases/strong-ichra-growth-among-large-employers-strengthens-aca-marketplace-and-risk-pool-hra-council-report-finds-302849192.html
• OneDigital, “5 Mid-Year Moves Small Businesses Should Make Before Their Next Health Plan Renewal,” June 3, 2026. https://www.onedigital.com/en-US/articles/5-mid-year-moves-small-businesses-should-make-before-their-next-health-plan-renewal
• NAPEO, “Intro to PEOs: FAQs,” checked September 11, 2026. https://napeo.org/intro-to-peos/faqs/
• Internal Revenue Service, Rev. Proc. 2025-19, May 1, 2025. https://www.irs.gov/pub/irs-drop/rp-25-19.pdf
• KFF, “Annual Family Premiums for Employer Coverage Rise 6% in 2025, Nearing $27,000, With Workers Paying $6,850 Toward Premiums Out of Their Paychecks,” October 22, 2025. 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/