The Future of
While each of these benefits
operates differently and are
governed by separate regulatory
structures, they share a common
thread: They allow employees
more freedom in directing their
finances and their company’s
finances toward the benefits they
find most valuable.
At the same time, they allow
businesses to define their
own budget and escape the
unsustainable cost increases
that dog the traditional group
As small businesses grow
increasingly unable to handle
those cost increases, the
personalized benefits market has
grown, and will continue to grow.
This article was originally published on the
Caitlin Bronson is the Content
Marketing Manager for PeopleKeep.
A professional communicator in the
health insurance space, Caitlin has
covered important policy changes
like the Affordable Care Act and 21st
Century Cures Act.
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What’s Causing The Shift To Personalized Benefits?
programs and accounts
designed—in the absence of
more generous benefits—to give
employees greater choice in how
their benefits dollars were spent.
Frequently called consumerdriven
accounts, these programs
became some of the market’s first
Among the first widely used
personalized benefits was
the Health Reimbursement
Arrangement (HRA). HRAs were
introduced through the Employee
Retirement Income Security
Act (ERISA) in 1974 as a way
for businesses to reimburse
employees for medical expenses
not covered by the company’s
group health insurance policy.
HRAs grew in popularity through
the 2000s, and eventually
evolved to reimburse employees
for individual health insurance
policies in addition to other
qualified medical expenses.
This meant businesses could
offer HRAs in place of group
Though HRAs were seriously
limited by the Affordable Care Act
in 2014, the 21st Century Cures
Act reintroduced them to the
small business market beginning
in 2017 as the Qualified Small
Employer HRA (QSEHRA).
Health savings accounts (HSAs)
were also introduced to
complement less generous health
policies and to encourage people
to make more personal choices
about their care. Created in 2003,
HSAs allowed employees to
save and spend tax-free money
on certain medical expenses.
These accounts could be funded
by employees, their company,
Due to the increased use of highdeductible
health plans (HDHPs),
a prerequisite to establishing
an HSA, HSA participation has
increased by more than 500
percent since 2006.
Retirement benefits began
evolving toward personalization
as well. Individual
retirement accounts (IRAs) were
created through ERISA in 1974,
incentivizing employees to start
saving for retirement on their
own. These accounts weren’t
tied to the employee’s company,
and investment options were
almost endless. IRAs evolved
into several forms, including
Simplified Employee Pension
(SEP) IRAs, which allowed
businesses to contribute toward
During this time, the federal
government extended tax
advantages toward other benefits
that allowed personalization.
In 1986, the Tax Reform Act
gave businesses the power
to contribute up to $5,250
tax-free toward their employees’
Tax-free transportation benefits
followed in 1993, and in 2010,
the Small Business Jobs Act
allowed businesses to contribute
tax-free money toward employees’
personal cell phones, if the
phones were used for business.
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