ICHRA for retail businesses: solving health insurance challenges

The retail industry employs nearly 32 million Americans, making it one of the largest private-sector industries in the United States.¹ From auto dealerships to home improvement centers to specialty stores, retail businesses face a complex benefits landscape: tight profit margins, high turnover rates, and diverse workforces spanning multiple locations.

For years, retail employers have been trapped in a cycle of unpredictable premium increases, participation challenges, and one-size-fits-all group plans that leave both employers and employees dissatisfied. ICHRA (Individual Coverage Health Reimbursement Arrangement) is challenging that equation by offering retail businesses predictable costs, employee choice, and simplified administration.

The retail benefits challenge

Retail employers contend with several factors that make health insurance particularly challenging. According to the Kaiser Family Foundation, average family premiums for employer-sponsored health insurance increased 7% in 2024, outpacing both inflation and wage growth.² For retail businesses operating on margins that typically range from just 0.5% to 4.5%,³ these increases create serious financial pressure.

Beyond cost increases, retail businesses face:

High workforce turnover: The retail sector experiences significant employee turnover, creating constant administrative work around eligibility tracking and enrollment management.

Diverse demographics: Retail workforces span different ages, locations, and coverage needs, from young single employees to mid-career workers with families to older employees approaching retirement.

Participation challenges: Many retail employees have coverage through a spouse’s plan, government programs, or their parents’ insurance (for workers under 26), making it difficult to maintain the 50-75% participation rates that keep group premiums viable.⁴

Claims volatility: A few expensive claims in one year can trigger massive renewal increases the next year, creating budget unpredictability.

Limited leverage: Unlike large corporations with thousands of employees, retail businesses often have limited negotiating power with insurance carriers.

According to a 2025 survey by the National Federation of Independent Business, 98% of small employers offering health insurance are concerned that the cost of providing it to their employees will become unsustainable.⁵ For many retail employers, these challenges have made traditional group insurance increasingly unworkable.

How ICHRA solves retail's benefits challenges

According to Mike Cumberland, a benefits consultant with over 34 years of experience, specializing in retail and hospitality sector clients, ICHRA addresses the core problems retail employers face with health insurance. In a recent discussion about retail industry challenges, Mike shared the experience of one of his clients, a very large RV dealership.

Watch the full video here: 

This dealership had been fully insured for many years. Despite having a solid broker relationship, they faced a frustrating pattern: annual premium increases of 30-35%, broker negotiations that reduced increases to around 24%, and a cycle that repeated year after year with no end in sight.

When Mike showed them a comparison of their current costs versus implementing ICHRA, the results were compelling. By switching to ICHRA, the dealership:

• Saved approximately $700,000 annually on health insurance costs

• Provided employees with a defined allowance to purchase individual marketplace coverage

• Gave employees better coverage than they had previously

• Reduced employee premium contributions while improving benefits

• Ended the cycle of unpredictable double-digit increases

Perhaps most significant was the employee response. As Mike describes it: “The employee experience has been such that they are thrilled that their cost of coverage came down and they got better benefits than what they had in the past.”

Why ICHRA works for retail employers

ICHRA, formally established by federal regulations in 2019 (effective 2020), allows employers to reimburse employees tax-free for individual health insurance premiums.⁶ Instead of purchasing a group plan, retail employers set defined monthly allowances, allow employees to shop for individual coverage, and reimburse them for their premiums.

This model delivers several key advantages for retail businesses:

Complete budget predictability

With ICHRA, retail employers know exactly what health benefits will cost each month. Allowances remain stable year over year; no surprise renewal increases, no claims-driven spikes, no participation penalties. For retail operations where accurate forecasting is essential, this predictability transforms health insurance from the most volatile budget line to the most predictable.

Employee choice and satisfaction

When employers shop for their own coverage on the individual marketplace, they select plans that match their specific needs. Young, healthy employees can choose affordable high-deductible plans. Employees with families can select plans with broader networks. Workers with chronic conditions can prioritize coverage that includes their specialists and medications.

The RV dealership case demonstrates this clearly: employees thanked their employer for the change because they got better coverage at lower personal cost. This level of employee satisfaction is rare with health insurance changes and creates a competitive advantage in tight labor markets.

No participation requirements

Unlike group insurance that requires 50-75% participation to remain viable, ICHRA has no participation minimums. Whether 100% of employees enroll or just 10%, employer costs remain exactly the same. This eliminates enrollment pressure and the issues that occur when participation drops trigger premium increases and further discourage enrollment.

ACA compliance

For retail employers with 50+ full-time equivalent employees, ICHRA satisfies the Affordable Care Act's employer mandate requirements when structured properly⁷. As long as allowances meet affordability standards (9.86% of the employee's W-2 wages for the lowest-cost self-only coverage option in 2025), employers avoid penalties while giving employees access to quality coverage.

Scalability across locations

As retail businesses open new locations or expand into new markets, ICHRA scales effortlessly. There's no need to renegotiate group plans, worry about participation requirements at each site, or coordinate different carrier requirements across locations. The same allowance structure works everywhere, with employees shopping in their local marketplaces.

Workforce flexibility

ICHRA allows retail employers to create different employee classes—full-time vs. part-time, different geographic locations, hourly vs. salaried—and offer different allowance amounts to each. This flexibility lets employers match their benefits investment to business needs while ensuring compliance.

We offer a full guide to HRAs for retail for more detailed information.

The benefits consultant opportunity in retail

The retail sector represents a significant opportunity for benefits consultants who understand ICHRA. With 32 million employees nationwide and widespread challenges with traditional group insurance, retail businesses are actively looking for solutions.

Several factors make retail particularly attractive for ICHRA:

Acute pain points: Annual increases of 30-35% (like Mike Cumberland's RV dealership client experienced) create urgency. Retail employers are actively seeking alternatives.

Clear value proposition: When you can demonstrate $700,000 in annual savings while improving benefits, the ROI is immediately compelling. The numbers sell themselves.

Workforce characteristics: Retail's diverse demographics make one-size-fits-all plans particularly problematic. ICHRA's personalization directly addresses this challenge.

Participation issues: Many retail businesses already struggle with participation rates that make group plans unviable. ICHRA eliminates this concern entirely.

Growth trajectory: Retail businesses that are expanding appreciate ICHRA's scalability and the freedom from renegotiating coverage at every new location.

Positioning ICHRA to retail clients

When presenting ICHRA to retail clients, consultants should focus on the specific challenges retail employers face:

Lead with cost predictability: Retail CFOs are tired of budgeting around volatile health insurance costs. The ability to set costs in advance and eliminate renewal volatility resonates immediately.

Emphasize employee satisfaction: Mike Cumberland's story about employees saying "thank you" for the first time in 30 years is powerful. Retail employers understand the value of employee morale in a high-turnover industry.

Address participation concerns: Many retail clients already struggle with low participation. Frame ICHRA as eliminating this problem rather than solving it.

Show the long-term math: Compare their current trajectory (assuming continued 20-30% annual increases) against ICHRA's stable costs. The five-year projection often makes the decision obvious.

Highlight competitive advantage: Retail businesses compete for employees. ICHRA offers a modern, flexible benefit that appeals to today's workforce without requiring massive premium dollars.

Read: Know before you go: A broker’s guide to selling an ICHRA

Is ICHRA right for your retail clients?

ICHRA may be ideal for retail clients experiencing:

• Annual premium increases exceeding 15-20%

• Unpredictable renewal costs that complicate budgeting

• Low participation rates triggering premium penalties

• Employee dissatisfaction with current coverage

• Challenges attracting and retaining talent

The retail industry's health insurance challenges aren't resolving on their own. Premium increases continue outpacing inflation, participation requirements create administrative headaches, and traditional group plans leave employers with unpredictable costs and employees with limited choices.

For benefits consultants, retail represents an opportunity to deliver measurable value to clients. The $700,000 in annual savings achieved by Mike Cumberland's RV dealership client isn't just an impressive number. It's the kind of outcome that generates referrals and establishes consultant credibility in a challenging market.

With proper planning and administrative support through platforms like Take Command Health, retail employers can achieve substantial cost savings, improved employee benefits, and the budget predictability they need to run their businesses effectively.

Ready to explore ICHRA for your retail clients? Take Command Health partners with retail businesses and benefits consultants to make ICHRA implementation seamless for retail employers.

Contact our team to learn how we can support your retail clients' transition to ICHRA.

References

1. National Retail Federation. (2024). "Retail Industry Facts & Figures." Retrieved from https://www.nrf.com/research/retail-industry-facts

2. Kaiser Family Foundation. (2024). "2024 Employer Health Benefits Survey." Retrieved from https://www.kff.org/health-costs/report/2024-employer-health-benefits-survey/

3. Corporate Finance Institute. (2024). "Retail Profit Margins: Industry Analysis." Retrieved from https://corporatefinanceinstitute.com/resources/accounting/retail-profit-margin/

4. Centers for Medicare & Medicaid Services. (2024). "Young Adults and the Affordable Care Act." Retrieved from https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/young-adults

5. National Federation of Independent Business. (2025). "Small Business Health Insurance Survey." Retrieved from https://strgnfibcom.blob.core.windows.net/nfibcom/Health-insurance-survey-NFIB.pdf

6. U.S. Department of Labor. (2020). "Health Reimbursement Arrangements and Other Account-Based Group Health Plans." Federal Register, Vol. 85, No. 120. Retrieved from https://www.federalregister.gov/documents/2020/06/20/2020-11924/health-reimbursement-arrangements-and-other-account-based-group-health-plans

7. Internal Revenue Service. (2025). "Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act." Retrieved from https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act