What is a deductible gap anyway? The “deductible gap” refers to the financial shortfall an employee faces between what their insurance plan begins to cover and what they must pay out-of-pocket. As healthcare costs rise, many Ohio small business owners are shifting toward High-Deductible Health Plans (HDHPs) to keep monthly premiums affordable; however, this often leaves employees responsible for thousands of dollars in initial medical costs before their benefits kick in.
In this blog, we are going to talk about the options for filling the deductible gap for your employees. Additionally, we are going to look at ways that this type of plan may work better long term for everyone while keeping costs manageable.
What to Expect from the Health Insurance World in 2026 and Beyond.
The year 2026 is shaping up to be a difficult one for Ohio business owners. Recent projections indicate that small group health insurance premiums in Ohio could jump by an average of 16%, driven by rising provider costs and the expiration of federal tax credits. For many local companies, the immediate reaction is to shift the burden by raising deductibles to $5,000 or more just to keep monthly costs manageable. However, this often leads to frustrated employees who feel their “benefits” have become a financial liability.
There is a way to navigate these rising costs while improving the value of your benefits package. By utilizing a “Premium Sharing” strategy through Health Reimbursement Arrangements (HRAs) or Health Savings Accounts (HSAs), you can lower your fixed monthly costs and give a portion of those savings back to your staff. This approach transforms a high-deductible health plan (HDHP) from a source of employee stress into a powerful tool for financial stability and tax-free savings.
The Math of Saving 20% on Premiums
To understand how this works, consider a typical Ohio small business currently paying for a traditional PPO plan with a $2,500 deductible. As 2026 rates hit, that plan may become unsustainable. By switching to a High-Deductible Health Plan (HDHP) with a $5,000 deductible, businesses often see a premium reduction of approximately 20% to 25%. On a plan that costs $10,000 per month for the whole team, that is a $2,000 monthly savings, or $24,000 per year.
The strategy is to take 50% of those savings—in this case, $12,000—and put it back into the employees’ pockets via an HRA or HSA. For an employee, a $5,000 deductible is intimidating, but it becomes much more manageable when the company provides $1,500 or $2,000 in a tax-free account to help bridge the gap. You save $12,000 on your bottom line, and your employees receive a “cushion” that often makes their effective deductibility lower than it was under the old, more expensive plan.
Choosing the Right Tool: HRA vs HSA 2025-2026
When deciding between an HRA and an HSA for your Ohio small business, the choice often comes down to who owns the money and how much control you want over the budget. A Health Savings Account (HSA) is owned by the employee and is highly portable; for 2026, the individual contribution limit is $4,400, while family limits rise to $8,750. HSAs are excellent for attracting talent that values long-term, tax-free investment growth, but once you contribute the money, it belongs to the employee even if they leave the company.
A Health Reimbursement Arrangement (HRA) offers more flexibility for the employer. With an HRA, you only pay when an employee incurs a medical expense and submits a claim. This “promise-to-pay” model is highly efficient; many employers find that only 15% to 20% of employees actually use the full amount, meaning the employer keeps any unspent funds at the end of the year. This makes HRAs an ideal solution for businesses looking to lower health insurance premiums while maintaining strict control over their benefits budget.
Protecting Your Team from the $5k Deductible Sting
The goal of this strategy is to ensure that employees don’t feel the sting of a $5,000 deductible. By using an “Employee Pays First” or “Split Deductible” HRA design, you can mirror the experience of a much richer plan. For example, the employee might pay the first $1,000 of their deductible, and the HRA covers the next $2,000. This effectively gives the employee a $1,000 deductible experience while the company enjoys the low premiums of a $5,000 plan.
How can AUI Help Small Businesses with the Deductible Gap?
At AUI we help with implementing an HSA for small business in Ohio. By designing customized HRA we may be able to help you fill the deductible gap for employees while you save money. We can also help educate your team on the true cost of care. When employees see the “math” of the savings and realize they are getting a portion of the premium reduction back in a tax-advantaged account, it builds trust and loyalty. In a year where many Ohio small businesses may simply feel cutting benefits is the only option. You can be the hero for your team that found a smarter way to provide better value for less.
Contact us today to learn more about AUI and our friendly brokers who simplify the complicated with small business benefits.
