Twin Cities, Two Roads Forward

Healthcare costs continue their upward climb, and employers across Minnesota are feeling the pressure. What’s more concerning is that there are few signs these trends will slow down anytime soon. For benefits decision-makers, the question is no longer if change is needed, it’s which direction to take.

In Minnesota, the pressure is especially clear. The fully insured small-group market is facing proposed 2026 renewal increases ranging from 7% to 17%, with an overall expected average of around 14%, representing the steepest jump since 2017.

As costs accelerate, many employers are realizing they’ve reached a crossroads. The traditional “renew and react” approach is becoming increasingly difficult to sustain.

Today, two distinct paths are emerging.

Road 1: Take Control of the Plan with a Captive Strategy

Some employers are choosing to lean in and taking greater ownership of their health plan strategy rather than simply absorbing annual rate increases.

One way they’re doing this is by joining a healthcare captive, where employers band together to share risk, gain greater transparency and control over their health plan performance.

Captive arrangements can help employers:

Gain deeper transparency into claims and cost drivers
Stabilize long-term healthcare spending
Access more favorable risk pooling with similar employers
Implement proactive strategies like population health management and targeted care programs

For employers that want to remain in the group health plan space but reduce volatility, captives offer a compelling middle ground between traditional fully insured plans and full self-funding.

In fact, data from M3’s Momentum Report, which tracks performance across participating captive members, shows:

82% of members run under expected claims levels
63% of members receive captive profit distributions
96% member retention

These results highlight why captives are no longer considered a niche strategy. As large claims and million-dollar diagnoses become more common, employers are increasingly drawn to models that offer greater stability, transparency, and the opportunity to reinvest savings back into their workforce.

Road 2: Step Away from Group Health Plans with an ICHRA Strategy

Other employers are deciding to take a very different route — leaving the traditional group health plan model altogether.

An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to provide employees with a defined contribution to purchase their own individual health insurance coverage.

With an ICHRA strategy, employers can:

Move away from traditional group medical plans
Provide a defined employer contribution toward coverage
Avoid unpredictable renewal increases
Give employees more choice in selecting plans that best fit their needs

Rather than acting as the plan administrator, employers shift into the role of benefit facilitator, supporting employees as they navigate the individual insurance market.

For some organizations, particularly those struggling with large rate swings or limited carrier options this approach can offer a more predictable budgeting model.

Which Road Is Right for Your Organization?

Every organization approaches healthcare benefits with different priorities, risk tolerance, and workforce dynamics. Some employers are ready to take greater control through strategies like captives, while others prefer to simplify their role with models like ICHRAs.

One thing is becoming increasingly clear: the road ahead won’t look like the road behind.

As healthcare costs continue to climb, every employer will reach the same intersection —Now’s the time to decide which route positions your organization for long‑term stability.

Key Takeaways

Minnesota employers are facing some of the steepest fully insured rate increases in nearly a decade, making the traditional “renew and react” approach increasingly difficult to sustain. Two roads are emerging.

Road One: Take greater control. Captive health plan strategies allow employers to share risk, gain transparency into claims data, and implement proactive population health strategies to stabilize long-term costs.

Road Two: Redefine the employer’s role. ICHRA models move employers away from traditional group health plans, offering a defined-contribution approach that provides employees more choice while improving budget predictability.

The destination matters more than the path.

Every employer’s workforce, risk tolerance, and strategic goals are different—but the organizations that evaluate their options today will be best positioned for long-term stability.

Get the green light on what strategy is best for your organization: Talk to your M3 Client Executive today.

Inquire now.

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