For many employee benefits brokers, the most important conversations of the year happen at renewal time. It’s when rate increases land on your client’s desk. It’s when coverage changes cause frustration. And it’s when employers start asking, “Isn’t there a better way to do this?”

One of those conversations a few years ago was the tipping point for a growing business with 40 employees. They had just been hit with another double-digit rate increase, the fourth in five years. To make the numbers work, they’d already cut benefits, raised deductibles, and shifted more cost to employees. Everyone was tired of the cycle. And that was the perfect time for the employee benefits broker to introduce something different with the simple question: “What if we built your benefits around an ICHRA instead?”

Employer classes were designed, monthly contribution amounts were set, and a communication plan was rolled out to help employees transition to Individual Coverage Health Reimbursement Arrangement (ICHRA).

A launch such as this can go very smoothly. Employees can choose the plans that fit their needs, the employer’s costs are fixed, and the renewal anxiety disappears.

When the next renewal season arrives, the conversation will feel very different. There will be no panic over a double-digit rate increase and no spreadsheets full of plan cuts to make the numbers work. Instead, employers might reach out with a new kind of question:
“We’re getting great feedback on the ICHRA, but is there a way to help employees with out-of-pocket costs too? Maybe dental or vision? We want to do more.”

This is not a crisis; it’s an opportunity. And that’s when employee benefits brokers can take the next step.

Step One: Lock In Pre-Tax Premiums with a POP Plan

An employee benefits broker’s first move should be to implement a Premium Only Plan (POP)—a simple Section 125 plan that lets employees pay their portion of the individual health premium using pre-tax dollars.

Why it matters:

  • Reduces taxable income for employees
  • Lowers FICA/FUTA taxes for the employer
  • Keeps ICHRA contributions clean and focused on premium reimbursement

This quick addition checks all the compliance boxes, and it’s often the first thing employee benefits brokers overlook when setting up ICHRA.

Step 2: Add a Cafeteria Plan with Defined Contributions

Once the employer is comfortable with ICHRA and POP, suggest the next layer: a Cafeteria Plan. This opens the door to additional buckets of tax-free value, and lets the employer strategically target areas where employees need the most support.

Think of it as a second stage in their benefits transformation: ICHRA takes care of premiums, but a Cafeteria Plan allows the employer to fund other everyday expenses without adding taxable income to an employee’s paycheck.

Maybe the employer has heard from employees that deductibles and copays are a burden. Or perhaps working parents are feeling the pinch of rising childcare costs. Either way, an employee benefits broker can offer solutions that are customized to their workforce.

Try introducing:

  • Health Flexible Spending Account (FSA): For medical, dental, and vision expenses like copays, prescriptions, and orthodontics.
  • Dependent Care FSA: For daycare, preschool, after-school programs, summer day camps, and elder care.

By adding even a small, predictable monthly contribution into each account, the employer creates immediate, tangible value for employees, without committing to unpredictable claims costs.

Employees now have real flexibility to use:

  • The ICHRA for their premium
  • The Health FSA for qualified medical expenses
  • The Dependent Care FSA for childcare and dependent care needs

 Why This Matters for Employee Benefits Brokers and Employers

  • Tax Savings: Contributions are pre-tax for employees; payroll is tax-free for employers.
  • Targeted Support: Addresses real-world needs employees face beyond their premiums.
  • Flexibility: Employers can adjust contribution amounts annually based on budget.
  • Recruitment & Retention: Adds high-perceived-value benefits without high fixed costs.

Example Tax Savings

A married employee earning $60,000 annually:

  • Contributes $2,000/year to a Health FSA for medical expenses
  • Contributes $5,000/year to a Dependent Care FSA for childcare

Impact:

  • Employee saves roughly $1,680 in federal, state, and payroll taxes
  • Employer saves around $535 in payroll taxes on those contributions

That’s over $2,200 in combined savings—without increasing the employee’s taxable income.

Don’t Forget the Ancillaries, They Still Matter

Employees may be buying individual health insurance, but they still expect the option to choose dental, vision, life insurance and disability coverage. With a well-structured Cafeteria Plan, you can help employers offer a defined contribution toward these ancillary benefits, allowing employees to allocate funds however they want.

Trend Insight: We’re seeing larger employers move this way to maintain a comprehensive benefits portfolio, even without a group medical plan.

For HSA-Friendly Designs, You’ve Got Options

When employees select a high-deductible health plan (HDHP), many employee benefits brokers stop at setting up a Health Savings Account (HSA), but there’s more you can do:

  • Add a Limited Purpose FSA (for dental and vision only) to pair with the HSA
  • Offer an employer-funded HSA contribution to jumpstart savings
  • Introduce Lifestyle Spending Accounts or post-tax wellbeing stipends
  • Continue offering a Dependent Care FSA because it’s completely separate from medical coverage rules, employees with an HSA can still take advantage of tax-free childcare and dependent care savings

These strategies maximize tax advantages while keeping your clients competitive in a benefits landscape where personalization wins.

It’s All Part of a Scalable Strategy

This isn’t just for small employers. Larger groups are also using ICHRA as a foundation for a defined contribution benefits model, one that works across multiple locations, pay scales, or subsidiaries.

With proper plan design, employee benefits brokers can help large employers:

  • Control costs
  • Offer flexible benefit choices
  • Stay ACA-compliant
  • Move away from rigid group plans without losing structure

Why This Approach Works

When you layer benefits strategically, starting with ICHRA and building on it with POPs, FSAs, dependent care, ancillary options, and HSA-compatible designs, you’re doing more than offering a collection of benefits.

You’re creating a high-value ecosystem that:

  • Maximizes tax savings for both employees and employers — in some cases, more than $2,000 annually for a single employee.
  • Expands choice so employees can select what matters most to them and their families
  • Improves benefits literacy, helping employees become thoughtful, informed healthcare consumers who know what they have and how to use it wisely
  • Optimizes employer funding so every dollar spent delivers the greatest possible impact

The result? Employees feel supported and empowered. Employers feel confident they’re getting the best return on their benefits investment. And employee benefits brokers strengthen their role as strategic advisors, not just insurance providers.

Flyte HCM Helps You Make It Happen

At Flyte, we’re not just administrators, we’re strategic partners to employee benefits brokers who are ready to lead.

Here’s what we offer:

  • ICHRA & QSEHRA Administration: End-to-end support for setup, compliance, claims processing, and employee onboarding.
  • POP Plans & Full Cafeteria Plan Services: From pre-tax premiums to FSAs (Health and Dependent Care), we build compliant, flexible Section 125 plans for employers of any size. We include POP document drafting and administration as part of our Section 125 offering and support post-tax ancillary products through Section 125 integration and employer contribution tracking.
  • HSA Administration: Tech-forward HSA accounts with banking, online and mobile access, debit cards, investment capabilities, and employee support.
  • FSA and Dependent Care FSA Administration: Includes plan documentation, claims substantiation, debit card integration, and compliance — so brokers and employers can focus on strategy, not paperwork.
  • Parking & Transit Plans: Pre-tax commuter benefits for parking and transit expenses, reducing taxable income for employees and payroll taxes for employers.
  • Lifestyle Spending Accounts (LSAs): Post-tax, highly customizable accounts for wellbeing, fitness, professional development, and other lifestyle-related expenses that align with employer culture.
  • Ancillary Benefit Integration: Define contributions for vision, dental, life, and disability trackable and customizable.
  • COBRA & State Continuation: Complete COBRA administration that works seamlessly with ICHRA and other HRA models.
  • ACA Reporting & Large Employer Support: Flyte helps you meet IRS requirements while staying strategic with plan design.
  • Health Account Manager & Mobile App: Real-time transparency for employees and HR—built to reduce confusion and increase engagement.
  • Applicable Large Employers (ALEs) Support: Includes affordability safe harbor consulting, 1094/1095 reporting, and tailored ICHRA plan design.

Let’s Build What’s Next

Employee benefits brokers are the architects of this new model. And with Flyte, you don’t have to build it alone. Let’s work together to help your clients move beyond the old group plan mindset—and toward something more flexible, scalable, and valuable.

With ICHRA at the center and layered benefits that are built for tax efficiency, choice, education, and funding optimization, you can help clients break free from the cycle of annual rate increases and build a program that’s sustainable year after year.

Schedule a discovery call with Flyte HCM and learn how the future of benefits is layered, flexible, and built with you in mind.