Helping Small Business Clients With Rising Pharmacy Costs: Fully Insured, Level-Funded and ICHRA
In short: Prescription drug costs, driven by specialty drugs and GLP-1 medications, are pushing small group renewals higher. Agents can help employers by comparing three funding models: fully insured, level-funded and ICHRA. Pairing a higher-deductible plan with supplemental coverage can also lower premiums while protecting employees. The agent who brings options before renewal day earns the employer’s trust and often the employees’ individual business too.
Small business owners feel rising health costs at every renewal. Pharmacy spending is a big reason. Specialty drugs for cancer and autoimmune conditions are a small share of prescriptions but a large share of cost. GLP-1 medications for diabetes and weight loss add a new layer of demand.
For an employer with 10 or 20 employees, one high-cost claimant can move the whole renewal. That’s where an informed agent makes a real difference.
Why Are Pharmacy Costs Driving Small Group Renewals?
When you sit down with an employer, explain the drivers in plain terms:
- Specialty drugs can cost thousands of dollars a month for a single employee.
- GLP-1 medications are in high demand and carry high prices.
- Small groups have less room to absorb risk. A few large claims can show up in next year’s rates.
Then move the conversation from “why” to “what can we do about it.”
What Are the Main Funding Options for Small Businesses?
| Option | How it works | Best fit | Watch for |
|---|---|---|---|
| Fully insured | Fixed monthly premium; the carrier takes the claims risk | Employers who want the most predictability | Usually the highest premium; renewals can jump |
| Level-funded | Set monthly payment that funds claims, admin and stop-loss; a surplus may be refunded | Healthier groups that want savings potential with a predictable budget | Underwriting; a bad claims year can affect renewal |
| ICHRA | Employer gives a tax-free monthly allowance; employees buy individual plans | Employers who want to cap their cost and give employees choice | Employee education; rules on employee classes and affordability |
None of these is right for every group. Your value is matching the model to the employer’s budget, workforce and tolerance for risk. Rules, availability and underwriting vary by carrier and state, so confirm details before you quote.
How Can Supplemental Benefits Lower Group Costs?
Many employers move to a higher-deductible primary plan to control premiums. You can soften the impact for employees by adding:
- Accident coverage for injuries.
- Critical illness coverage for major diagnoses.
- Hospital indemnity coverage for hospital stays.
These pay cash benefits that help employees with deductibles and coinsurance. See our post on selling hospital indemnity and critical illness coverage for conversation tips.
How Does ICHRA Create Opportunities for Individual Agents?
ICHRA links group and individual coverage. Each employee shops for an individual plan, often on the ACA Marketplace or directly with a carrier. That means each employee needs help choosing a plan.
If you already sell ACA plans, ICHRA can turn one employer relationship into many individual clients. If you don’t yet sell ACA, our guide to adding ACA health insurance to your Medicare book is a good starting point.
What Ongoing Service Do Employers Expect?
The sale is only the beginning. Employers stay with agents who handle:
- Onboarding new hires and issuing ID cards.
- Billing questions and claim problems.
- Life changes, like an employee turning 65 or a dependent turning 26.
- An annual review well before the renewal date.
Employees turning 65 are also a natural bridge to Medicare. Our guide on clients working past 65 explains how employer coverage and Medicare work together.
How Does Lourie Agent Partners Help With Group Cases?
You don’t have to work a group case alone. As a Lourie Agent Partner, you get:
- An experienced team with over 100 years of combined experience in health, Medicare and life insurance, available by phone every business day.
- Direct carrier appointments for health, supplemental, dental and vision products, with commissions paid directly to you and full vesting from day one.
- Marketing support through our Advanced Marketing Program, including help leveraging your existing book and building a referral network. Explore our marketing program.
- Training on product options and client conversations through workshops, webinars and bi-weekly partner calls.
Frequently Asked Questions
The employer pays a set monthly amount that covers expected claims, administration and stop-loss coverage. If claims come in lower than expected, the group may receive a refund.
An Individual Coverage Health Reimbursement Arrangement lets an employer give employees a tax-free monthly allowance to buy their own individual health plans.
Specialty drugs and high demand for GLP-1 medications are major drivers. In a small group, a few high-cost prescriptions can affect the whole renewal.
Yes. Many Medicare agents start with employers they already know. Supplemental products and ICHRA are good entry points, and our team can support you on your first cases.
Yes. Our team helps partners compare options, answer employer questions and find the right carrier for the group.
Bring Employers Better Options, With a Team Behind You
Employers remember the agent who showed up with solutions before renewal day. Let our team help you build that reputation. Get contracted with Lourie Agent Partners or call (803) 256-2067.