If your shop’s health insurance renewal came with another price increase, you’re probably wondering how much longer you can keep absorbing the cost.

And you’re not alone.

I’ve seen premiums climb around 10% again, with coverage for a single middle-aged employee in Maryland running close to $900 a month.

For a small auto repair shop, that adds up quickly.

You want to take care of your employees and offer benefits that help you compete for good technicians. But you also have a business to run, and spending thousands on coverage nobody wants or can afford doesn’t make much sense.

So before you automatically renew your current plan, it’s worth looking at what you’re actually paying for and what other options might work.

Is Your Health Insurance Plan Worth the Cost?

Offering health insurance is great, but only if your employees can realistically use it.

A healthy 26-year-old technician may not see much value in paying thousands of dollars each year for coverage. An older employee with a family may look at that same benefit very differently.

That’s why offering a group plan doesn’t automatically make your shop more attractive.

If your employees can find less expensive coverage through the marketplace, they may wonder why they’re paying more through work.

My general rule is that if you can’t afford to contribute at least 50% toward individual coverage, you should take a closer look at whether offering a traditional group plan makes sense.

The goal isn’t simply to check the benefits box. It’s to provide something your team actually values.

Why You Can’t Just Pay Employees Back

Let’s say your group plan costs $800 a month, but an employee finds individual coverage for $500.

Why not give them the $500 and call it a day?

Unfortunately, health insurance doesn’t work quite that way.

Employers generally can’t reimburse individual insurance premiums through informal arrangements without running into federal compliance issues.

There are approved ways to reimburse employees, but they have specific requirements.

Traditional group coverage also comes with tax advantages. Employer contributions may be deductible, and employees can often pay their portion through payroll using pre-tax dollars.

For example, a $1,000 premium could produce approximately $250 in tax savings, depending on the circumstances.

That changes the math when comparing group coverage with individual plans.

You also need to be careful about treating employees differently. Offering one technician a special benefit while excluding others in similar positions can create problems under applicable nondiscrimination rules.

Consider Alternatives Before Dropping Coverage

If traditional group insurance is getting too expensive, you still have options.

One approach is to increase employees’ taxable wages rather than provide health coverage. That gives them more flexibility, although it doesn’t offer the same tax treatment as an employer-sponsored plan.

Another possibility is a high-deductible health plan paired with a Health Savings Account, or HSA. For eligible employees, this can mean lower monthly premiums and the ability to set aside money for qualified medical expenses.

Larger shops may benefit from working with a Professional Employer Organization, or PEO, which can help manage payroll, HR, and employee benefits.

Smaller shops may want to explore a Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA. If your business qualifies, this arrangement can reimburse employees for eligible medical expenses, including individual health insurance premiums, within federal limits.

Each option has different costs and requirements, so it’s important to understand the details before making changes.

Don’t Choose a Plan Based on Price Alone

Saving money on premiums sounds great until you realize your employees are paying significantly more out of pocket.

A cheaper plan may come with higher deductibles, limited provider networks, or coverage that doesn’t meet your team’s needs.

And if your best technicians leave because your benefits are no longer competitive, those savings can disappear pretty quickly.

Look at the total cost to your business, what employees will actually receive, and how the plan fits into your overall compensation strategy.

Health insurance is expensive, and there’s no perfect solution for every shop.

But you don’t have to keep renewing the same plan simply because that’s what you’ve always done.

Review your options, understand the tax and compliance rules, and work with a qualified benefits professional to find something that makes financial sense.

The best plan isn’t necessarily the cheapest one. It’s the one your shop can afford and your employees have a reason to appreciate.