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.
