The Cheapest Way to Offer Employee Benefits to Your Team
Nearly half of all small businesses in America do not offer employee benefits. According to the Society for Human Resource Management (SHRM), 46% of small businesses cite cost as the primary barrier to offering any benefits at all. The irony is that not offering benefits is itself expensive — higher turnover, lower productivity, and difficulty recruiting compound into costs that often exceed what benefits would have required.
The good news: not all benefits options carry the same price tag. The range spans from programs that generate net savings to plans that cost over $24,000 per employee per year. Understanding these options — ranked from least to most expensive — gives employers a clear framework for making the right decision.
Employee Benefits Options Ranked by Cost
1. SIMRP-Based Preventive Care — Least Expensive ($0 Employer Expense + Generates Savings)
A Self Insured Medical Reimbursement Program structured under IRC §105(b) and §125 requires no out-of-pocket expenses from employers. The Preventive Care Benefits Program (PCBP) uses pre-tax payroll restructuring to fund comprehensive preventive care benefits — including 1,000+ prescriptions, unlimited telemedicine, $150,000 life insurance, and mental health counseling. Because the pre-tax deduction reduces FICA-taxable wages, employers save 7.65% on each participating employee's benefit amount, generating $1,119–$1,186 per employee per year in FICA tax savings.
2. Voluntary Benefits — $0 Employer Cost, No Savings
Voluntary benefits — dental, vision, supplemental life, accident coverage — are paid entirely by employees through payroll deductions. The employer facilitates access but contributes nothing financially. While this approach has no direct employer cost, it also generates no tax savings, and the benefits tend to be narrow in scope compared to comprehensive programs.
3. QSEHRA — $100–$500/Month Employer Contribution
A Qualified Small Employer Health Reimbursement Arrangement allows employers with fewer than 50 employees to reimburse employees for individual health insurance premiums and qualified medical expenses. For 2025, the IRS caps contributions at $6,350 per individual and $12,800 per family annually. While more affordable than group insurance, this still represents a direct employer expense of $1,200–$6,000+ per employee per year.
4. ICHRA — Employer Sets Budget, Employees Choose Plans
An Individual Coverage HRA allows employers of any size to set a monthly allowance for employees to purchase their own individual health insurance on the marketplace. There are no contribution caps, but employers must fund the allowance — typically $200–$600 per month per employee, totaling $2,400–$7,200 annually.
5. Group Health Insurance — Most Expensive ($7,000–$24,000/Employee/Year)
Traditional group health insurance remains the most expensive option. The Kaiser Family Foundation reports average annual premiums of $8,435 for individual coverage and $23,968 for family coverage in 2024, with employers typically covering 80–83% of individual premiums and 70–73% of family premiums. Annual rate increases of 8–15% make long-term budgeting unpredictable.
Why SIMRP Ranks First
The PCBP is the only benefits option that moves the employer's financial position in a positive direction. Every other option — from voluntary benefits (neutral) to group health insurance (significantly negative) — either costs money or breaks even. The SIMRP structure actively generates savings because the Section 125 pre-tax deduction reduces the employer's FICA obligation on participating employees' wages.
For a business with 25 employees, that translates to approximately $27,975–$29,650 per year in employer FICA savings. For 50 employees, $55,950–$59,300. These are not hypothetical figures — they are a direct mathematical result of reducing FICA-taxable payroll by $1,220 per employee per month.
Addressing the Skepticism
The most common question employers ask: “If it requires no out-of-pocket expenses, why doesn't everyone do it?”
The answer is straightforward. Self Insured Medical Reimbursement Programs have been utilized by Fortune 500 companies and large corporations for decades. The legal framework — IRC §105(b), §125, and IRS Memorandum 202323006 — is well established. What is relatively new is the packaging of this structure into a turnkey program accessible to small and mid-sized businesses. Most employers, CPAs, and insurance brokers have not yet encountered SIMRPs because the benefits industry has historically focused on group health insurance as the default solution.
The comparison with traditional benefits makes the structural difference clear: every other model requires the employer to fund the benefits. The SIMRP model funds benefits through pre-tax payroll restructuring while generating employer savings.
The Business Case Beyond Cost
Cost is the starting point, but the impact extends further. Gallup's State of the American Workplace research shows that companies with comprehensive benefits programs see 21% higher profitability and 41% lower absenteeism. SHRM reports that 92% of employees consider benefits important to their overall job satisfaction — making benefits a decisive factor in both recruitment and retention.
For employers currently offering no benefits at all, the PCBP eliminates the cost objection entirely. For those already spending on group health insurance or HRAs, the PCBP can supplement existing coverage or provide a comprehensive alternative at a fraction of the cost — or more precisely, at no out-of-pocket expenses while generating positive returns.
The cheapest way to offer employee benefits is not about cutting corners or providing token perks. It is about using a legally established tax structure to deliver real, substantive benefits while improving the employer's bottom line. The Preventive Care Benefits Program achieves exactly that.