HAIRCLUB changed its 140 employees to individualized health plans and reduced the costs of the premium by 53%

Good morning!

Ascend Health costs To continue to be a huge problem for employers and Leaders of human resourcesEspecially since companies seek ways to reduce costs. This is a problem of hair restoration of the hair company (formerly the Hair Club for men) knows it well.

The company struggled with high medical costs for its approximately 140 businessmen, and last year, premiums only cost about $ 115,000 a month. And his previous healthcare provider said that renewal costs could increase another 20-30%due to the company’s a little larger population, says Yadira Irizarry, Hairclub’s accounting director of accounting. This type of increase would have been “unsustainable”, he says.

“We knew that if the costs increased, employees should choose between obtaining health care or other benefits, but not both,” says Irizarry, “and this is not a position where we wanted to put our people.”

Thus, in August 2024, Hairclub shot his healthcare plans, and instead offered all his reimbursement reimbursement employees (ICHRAS) through Zorro, a startup founded in 2022 that works with companies such as Hairclub to help them establish and execute these offers for employees.

Irizarry says changing to an Ichra model reduced the costs of the premium by 53% and also resulted in a 40% reduction in plan renewals or the costs associated with the continuity of health plans in a new registration period. All this was despite 20% more employees.

These health -tailor -made advantages, which were made available for the first time in January 2020 after some Federal rules changesAllow workers to reimburse medical expenses (such as premiums, deductibles and co -payments) who use dollars before the tax instead of individual healthcare expenses. This allows employers to personalize the benefits of their employees, saving them -money. Employees can choose individual health plans from any carrier, offering greater control over their health.

That said, there are many reasons why companies are so hesitant in the transition to a more individualized health model. Irizarry says to change the plan took some time, and a bit of education for employees about how their benefits changed, which can cause some anxiety, of course, especially as many had limited options until change in Ichras.

“There was a bit of confusion because employees have their own plan, they manage to choose what they want and many people did not have this option before and do not understand how it could be more affordable.”

However, changing successfully in Ichras means that human resources leaders will have to manage various plans at the same time, sometimes hundreds, and without software or consultants available to help, it can be tedious, says Perl.

“Often, the question we encounter is not why an entrepreneur should change to Ichras, because they understand possible savings, but how they will manage the plan, which is the real problem here.”

Brit Morse
brit.morse@fortune.com

This story originally presented to Fortune.com

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