Next in Benefits: Q&A with Gusto's Leah Brite

A: One of the biggest shifts we’re seeing is a move toward more flexible, affordable funding models that still offer strong coverage. Small businesses are no longer limited to traditional, fully insured plans. Many are embracing level-funded health plans or HRAs (Health Reimbursement Arrangements) to give their teams meaningful coverage without blowing the budget. 

Level-funded plans, in particular, are gaining traction. In fact, according to the Kaiser Family Foundation, the share of covered workers in small businesses enrolled in level-funded plans jumped from just 6% in 2018 to 38% in 2023.

Businesses are attracted to level-funded because they offer cost control and potential savings. Unlike traditional plans, costs are based on your group’s health and how much your team uses healthcare services. Teams with lower utilization can access significant savings. If your team stays healthy and doesn’t use all the funds, you may even get money back at the end of the year.  

We’re also seeing a surge in retirement plan adoption, thanks in part to state mandates—but also due to federal incentives. The SECURE Act 2.0 introduced expanded tax credits that make it significantly more affordable for small businesses to start a 401(k) plan. In some cases, employers can cover most or even all of their administrative costs through these credits. 

It all points to a larger trend: SMBs are taking benefits more seriously—not just to check a box, but to attract great talent, retain their teams, and build workplaces they’re proud of. At the same time, we’re seeing a strong shift toward simplicity—HR managers want one place to manage everything.

More and more small businesses are adopting the full suite of Gusto offerings—from payroll and health benefits to retirement savings—because what they value most is the ease of managing it all in one platform. When payroll, benefits, and compliance work together, it reduces complexity and makes life easier for lean HR teams. 

A: The key is to match your benefits to your team’s needs and your budget—and to work with a broker or advisor who can help you find that balance. 

At Gusto, we often advise small business owners to start by asking two questions: 

• What matters most to your employees?

• What can you reasonably afford as a business? 

Once you have that clarity, there are cost-effective ways to move forward. For example: 

• In a limited rollout of level-funded plans, we’ve seen that when qualifying businesses move from fully-insured to a level-funded plan, they save an average of ~20% on their premiums. This is a great option for younger, healthier teams that tend to utilize healthcare services less (and thus their rates are lower). 

• HRAs let you reimburse employees for individual plans, giving them choice while capping your spend.

• Even offering benefits like PTO and a 401(k) without a match can go a long way and can be affordable places to start. 

It’s not about doing everything. It’s about doing something intentional—and building from there. 

A: One of the biggest and most complex challenges small businesses face is compliance. The U.S. Chamber of Commerce found that on average, small businesses spend 200 hours a year and $11,700 per employee just maintaining compliance. That doesn’t even account for potential penalties, which can climb into the tens or even hundreds of thousands of dollars—a risk many small businesses simply can’t afford. 

Large companies have compliance departments to handle this. Most small businesses don’t. And that gap can feel overwhelming. 

For benefits-specific compliance, the landscape is changing quickly: 

• As of May 2025, 20 states have passed state-mandated retirement programs, and 13 have active programs. And those mandates can kick in early. While most states have a mandate beginning at 5 employees, in states like Oregon, the mandate kicks in at just 1 employee.  

• ACA filings, COBRA requirements, and Section 125 plans require accurate documentation and deadlines.

• Even common events like new hires, life changes, or terminations can trigger reporting requirements.

That’s why Gusto is built with compliance at the core. We adapt our products to help customers stay compliant automatically—from pre-tax deductions and benefits documentation to required filings—so lean HR teams don’t have to do it all manually. Our goal is to help level the playing field, giving small businesses the same peace of mind as much larger employers. 

A: Technology is transforming what’s possible for small HR teams. 

At its best, it does three things: 

1. Automates the admin: Enrollments, terminations, deductions, compliance filings—these no longer have to be manual or error-prone.
2. Empowers employees: Tools like self-serve benefits dashboards give employees visibility and choice, without endless back-and-forth.
3. Integrates seamlessly: When your payroll, benefits, and HR live in one system, everything flows—from eligibility to deductions to renewals. 

I spoke with one customer who initially chose a local broker over Gusto. Three months later, they switched back, laughing that, “I didn’t realize how big of a pain manual deductions would be.” That kind of friction is real—and solvable. 

With the right platform, HR leaders can focus less on data entry and more on strategy, culture, and care. 

A: While enterprises may have pioneered choice-based models, SMBs are increasingly following suit—driven by both employee expectations and newer benefit models that make flexibility affordable. 

For example: 

• HRAs let you reimburse employees for the individual plan of their choosing.

• Level-funded plans give small teams more control over costs based on their own health and usage—not a generic market average.

• Some businesses even offer stipends or lifestyle spending accounts to support wellness, commuting, or professional development.

The beauty of these approaches? They meet people where they are—whether that’s a new grad paying off debt, a parent managing childcare, or a remote worker navigating health access across state lines. 

The best benefit is the one that gets used. Flexibility helps make that possible. 

A: Younger employees are changing the conversation around benefits—and in many ways, raising the bar. 

They want: 

• Transparency: What’s covered? What’s it going to cost me?

• Choice: Not just health plans, but access to mental health care, financial wellness tools, and retirement savings.

• Purpose: A sense that their employer cares—not just about output, but about their whole life.

And while these expectations are high, they’re not unrealistic. In fact, they’re an opportunity. 

I’ve seen businesses start with something simple—like introducing a 401(k) without a match or offering access to individual health plans through an HRA—and win over incredible early-career talent.

What matters is doing your due diligence to deeply understand what employees want, researching what it will cost, and then rolling out a benefits roadmap that strikes the best balance between quality coverage that employees value and what your business can afford.  

A: Equity across state lines is a growing challenge—especially as more small businesses operate remotely or support distributed teams. Health insurance costs and plan availability vary dramatically by geography, which can create unintended disparities among employees based on where they live. 

The good news is: SMBs are getting savvier. More are learning how to navigate the system to meet their team’s needs and budget: 

• They’re understanding when to offer small group health insurance vs. individual health insurance through HRAs. For example, employers in states like Texas, Oklahoma, and Vermont often get better rates through traditional small group plans, while those in Ohio or Georgia may save more by reimbursing employees via an ICHRA or QSEHRA.

• Some are starting with a 401(k) before health benefits—especially if many employees already have coverage through a spouse or parent. A 401(k) can be more valuable and easier to administer, because it’s governed nationally by the Employee Retirement Income Security Act (ERISA), unlike health insurance, which is regulated state by state.

• They’re also leaning into digital-first tools for communication, onboarding, and self-serve benefits management to ensure everyone gets access, clarity, and support.

Ultimately, it’s about designing benefits with flexibility and fairness in mind—so every employee feels supported, no matter where they’re located.

A: I’m happy to see this shift—and honestly, it’s overdue. 

There’s still a myth out there that you can only offer benefits at the beginning of the year. But that’s just not true. Businesses can start offering benefits any time, and many do so strategically—like right before hiring a new employee or following a funding milestone. 

More importantly, employees don’t think about benefits once a year. They think about them when they’re having a baby, moving states, or supporting a partner through illness. By moving from a one-and-done approach to an ongoing dialogue, HR leaders can better support their teams through life’s real moments—big and small. 

That said, there’s also value in the traditional end-of-year enrollment cycle. For employees lucky enough to have access to multiple health plans—say, through a spouse’s employer—having those open enrollment windows align can be a huge advantage. It gives families more flexibility to compare options and choose the coverage that works best for them. 

In the end, it’s not about picking one approach—it’s about creating a system that’s responsive to your team’s needs and life circumstances. 

There are a few key signals I always tell teams to watch for: 

• Struggling to hire or retain talent

• Frequent questions or confusion about current offerings 

• Employees asking for benefits you don’t currently offer

• New state mandates or compliance changes

• Benefits costs creeping beyond what feels sustainable

And the data backs up the impact of investing in benefits. At Gusto, we’ve found that employees with health insurance are 25% less likely to quit during their first year of employment. That number rises to 30% in professional services sectors, where competition for talent can be especially fierce. 

But data aside, sometimes the best signal is a gut check. If your current offerings don’t reflect your values—or don’t support your team in the way they deserve—it’s time to take another look. You don’t need to do everything overnight. Start small. Listen to your people. Build the kind of workplace you’d want to be part of. 

A: To me, a best-in-class benefits experience in the coming year will be: 

• Cost-optimized: Designed to deliver maximum value for both the business and its people—meeting budget realities, especially given rising healthcare costs, without sacrificing quality.

• Human-centered: Rooted in listening to employees and building trust, while meeting people where they are—across geographies, life stages, and financial realities—to make you a more attractive employer. 

• ​​Tech-enabled and AI-powered: Smart, integrated tools that reduce admin and increase accuracy—while also leveraging AI to deliver personalized, proactive guidance at scale.

We’re actively building a reality where Gusto powers smarter HR through AI—making it easier for small and growing businesses to care for their teams in ways that are simple, smart, and deeply human.