Renewal season is closing in, and getting it right matters, both for your budget and for your team. In this edition, we're covering how to choose the right plan, what's new in Gusto's benefits tools this year, and what 500 small business employees told us about choosing benefits.
Featured update
A new way to offer health benefits: health allowances, powered by Thatch
As health insurance costs continue to rise, more businesses are looking for alternatives to traditional small group plans. Maybe you don't meet small group eligibility requirements, or you're looking for a more predictable, budget-friendly way to offer benefits for the first time. That's why we partnered with Thatch to bring health allowances — also known as ICHRAs, or Individual Coverage Health Reimbursement Arrangements — to Gusto. They offer a flexible alternative to small group health insurance.
With a health allowance, you set a monthly budget for health benefits, and your team shops the individual market through Thatch for the plan that actually fits them, with a wide range of carriers and networks. There are no participation minimums to meet, and more predictability, since your costs are based on what you choose to contribute, not carrier premium increases.
Contributions are tax-deductible for employers and tax-free for employees.1 Once your team enrolls, reimbursements sync automatically with your Gusto payroll, so there's nothing to track by hand.
What's new in benefits
A better renewal experience is here
The Gusto team has been focusing on taking the stress out of benefits renewal. In an environment where cost is the top factor in nearly every benefits decision, we’re giving employers cost-optimized recommendations, clear tradeoff analysis, and the expert guidance needed to make a confident decision.
Employers renewing through Gusto have direct access to a dedicated advisor. Personalized benchmarking demonstrates how the benefits offered compare to those of similar companies, and scenario modeling shows what changes with different plan options. Gusto's plan optimization automatically surfaces cost-effective alternatives, with full transparency into the cost per enrolled life, as well as recommendations for low- and no-cost ancillary benefits that increase value for employees and their families.
Even for employers who are not currently managing benefits through Gusto, a Benefits Advisor can walk through planning for an upcoming renewal and help with understanding options.
Your new 401(k): No extra logins. All in Gusto.
Setting up retirement benefits used to mean managing them outside your payroll platform: a separate login, a separate provider, contributions reconciled by hand. The Gusto 401(k) closes that gap. It’s built directly into your Benefits dashboard, so you can set up and manage a plan for your team in the same place you already run payroll, with contributions synced automatically.
Offering a 401(k) is a clear way to show your team you’re investing in their financial future. Making it this easy to set up and manage means it's one you can keep offering, year after year, with little admin required.
Benefits education
A webinar for every need
You may already have benefits — either managed through Gusto, or through an external broker. Or maybe you're just starting to consider your options. Either way, we've got a session for you this fall: six webinars, September through December, each built to dive deep on a different topic. Click on the titles below to learn more about each of these webinars, featuring expert advisors, real customer stories, and tips for benefits success.
Sep 3 — Benefits 101: An introduction to offering benefits for the first time, covering the basics of health insurance and 401(k)s and answering the questions that most often arise.
Sep 17 — Integrating Health Benefits: If you manage benefits outside of Gusto, learn how to make this year the easiest renewal yet — you can often keep the same plan and carrier, with simpler administration.
Oct 15 — Health Benefits: A jargon-free session on the health insurance options available to small businesses, what they cost, and how to choose the right fit for your team.
Oct 22 — Renewals: For Gusto benefits customers, get ahead of renewal season by understanding your options and the resources available to you. Understand your renewal timeline, and learn how to enrich your benefits package with little or no cost.
Dec 3 — 401(k): A more in-depth session on 401(k) options available through Gusto 401(k) - for those setting up for the first time or looking to consolidate benefits platforms.
What 500 employees told us about their benefits—and what it means for yours
As a small business owner, you decide what benefits to offer. But without some guidance, that can feel like ordering dinner before your guests arrive, without knowing what they're in the mood for. So we surveyed 500 recent benefits enrollees to find out what actually makes someone say yes to a benefit, and what makes them pass.2
The biggest surprise: preventive care messaging beat "low cost" as the top reason employees valued medical, dental, and vision coverage. Tax advantages, not employer contributions, are what sell people on HSAs and FSAs. And when employees skip a benefit, "not worth it" is usually the reason cited — a signal that better education into the value of specific benefits could shift behavior.
The findings suggest that businesses that get the most out of their benefits spend aren't necessarily the ones spending the most- they're the ones choosing benefits that match what employees look for when deciding whether to enroll. If it's been a while since you analyzed your own lineup vs employee needs, a Gusto benefits advisor can help you identify any gaps.
And by the numbers: health insurance pays off
When we interviewed small businesses as part of the State of Small Business Survey, we found that, of those who offer any benefits, nearly 60% include health insurance. Health insurance was offered by nearly 40% of all small businesses included in this study. We also found offering benefits can improve business results- as summarized below.
Businesses offering health insurance are 25% more likely to say employees are outperforming expectations. Health insurance doesn't just boost retention — it shows up in performance, too. More than 1 in 3 small business owners who offer health insurance say their employees are exceeding expectations. Offering coverage signals that you're invested in your team's well-being, and that tends to pay dividends in engagement and results.
Past data indicates that businesses offering health insurance had an easier time hiring. Health insurance also helped businesses compete for talent. Small businesses that offered it were 13% more likely to successfully hire than those offering benefits without health insurance — and the gap held even at the smallest end: 70% of businesses with fewer than 10 employees that offered health insurance found the hires they needed, compared to 64% of similarly sized businesses offering benefits without it. It’s no surprise that, given the choice, employees gravitate toward employers who offer health coverage.
What's changing in compliance
Check a compliance box with Section 125 plan documentation
When employees pay for health insurance or other benefits with pre-tax dollars and the employer does not have a valid Section 125 plan document on file, they may be operating out of compliance without realizing it.
A Section 125 document outlines some guidelines for benefit plans:
Which employees are eligible to participate
Which benefits are included (typically health, dental, and vision premiums)
The plan year (typically 12 months)
Election procedures (how employees enroll and make changes to their elections)
The document needs to be created and maintained on file before employees begin making pre-tax contributions. It typically also needs to be reviewed or renewed each plan year.
This is one of the most common gaps for small businesses- but if your health benefits are managed through Gusto, we help handle your Section 125 documentation at no extra cost. Once your plan is active, you can find it in Gusto under Documents > Benefits as part of your Health & Welfare Plan Document. If you have questions, a Gusto Benefits Advisor can help.
The lowdown on Section 125 documentation
Footnotes:
1 Contact your tax advisor before deciding. While contributions are generally tax-free, other business or personal taxes may be impacted. ICHRA administration is provided in partnership with Thatch. This article is not tax, legal, benefits, financial, or HR advice. Health benefits offered through Gusto Insurance Services, LLC (CA Lic # 0K28399). Since rules and regulations change over time and can vary by location, consult a lawyer, tax, or HR expert for specific guidance.
2 Methodology: 500 recent benefits enrollees were surveyed and asked to pick their top statements per line of coverage (top 2 for most lines, top 1 for DCFSA). Barrier questions were asked to non-enrollees who were offered but did not elect coverage. Some line-of-coverage barrier samples (medical, dental, FSA, DCFSA) are smaller and should be treated as directional; vision and HSA barrier samples are more robust. Percentages cited for smaller-sample lines reflect directional patterns rather than statistically precise rates.
Disclaimers:
This content is not to be taken as tax, legal, benefits, financial, investment, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer, tax, or HR expert for specific guidance. Insurance products and services offered through Gusto Insurance Services, LLC (CA Lic # 0K28399).
