How Palisades Hospitality switched to ICHRA and avoided a 63% group plan renewal

Palisades Hospitality Group is a bespoke hospitality management company based in Mill Valley, California. While the group’s primary focus is California, Palisades also has properties in Texas, Utah, and Washington. Palisades Hospitality Group currently has over 1,200 employees, more than 500 of which are eligible for benefits.  

• Customer: Palisades Hospitality Group
• Description: Palisades Hospitality Group is a hospitality management company with a portfolio of brands including Camp Outpost Co., Mosaic Hotel Group, and Piatti Restaurants
• Size: 1,200+ employees 
• Industry: Hospitality 

Key Results

• Avoided a 63% UnitedHealthcare renewal 
• Ensured all employees have choices for healthcare
• Combined individual coverage with existing group plan

For companies like Palisades Hospitality Group, prioritizing staff retention is essential to success in a competitive market. According to recent data from the Bureau of Labor Statistics, the annual employee turnover rate for the hospitality industry is nearly 74%. Constantly recruiting and training new staff isn’t just inconvenient, it’s also expensive — according to Gallup, the costs of replacing an employee can range from one-half to two times their annual salary. 

Terri Ann Gordon is an employment and benefits manager at Palisades Hospitality Group. Having worked in restaurants for over 20 years, she understands the complexity of balancing employees’ healthcare needs with the demands of the business. Gordon recognized the need for Palisades to be able to offer employees a choice on their healthcare coverage — giving employees multiple options can make the difference between getting coverage and going without. However, Palisades was previously unable to offer this freedom to all its employees. 

Before moving to ICHRA, we had Kaiser Permanente for everyone in California, and we also had UnitedHealthcare (UHC),” explained Gordon. “Kaiser Permanente was not available to our out-of-California locations. So, if you were in California, you had the benefit of more choice; outside California, you only had UHC.

Challenge: Low participation drives up group renewal rates

Participation in the UnitedHealthcare plan was low across all Palisades’ locations. In California, only 30 out of more than 400 eligible employees chose UHC, with the rest opting instead for the more affordable Kaiser Permanente plan. In other states, just 20 to 30 employees enrolled in total — most preferring to skip coverage altogether rather than take on an expensive PPO. The few employees that chose UHC did so because they didn't like Kaiser/HMO plans or their families had health issues requiring specialized care. As a result, these employees had high usage of their insurance. 

Low participation and high usage is an expensive combination for group insurance providers. With fewer people contributing to premiums and more making claims, the financial burden on the provider increases. As a result, UHC quoted Palisades with a staggering 63% renewal increase going into 2024. The company had to make a change.

“Even though we’re a company with 500 eligible employees, that’s not a big organization in the world of insurance,” said Gordon. “Going into 2024, UnitedHealthcare quoted us a 63% increase, which was completely undoable. We’d gone through a 25% increase the year before, which was very hard on our employees who did choose to keep UHC. From that point, our broker worked with us to shop different providers, but we couldn’t even get a quote based on our enrollment numbers for UHC for the year prior.”

Solution: Healthcare plans that work for everyone

Priced out of the group insurance market, Palisades Hospitality began considering the individual coverage HRA (ICHRA). ICHRA allows employees to shop for their own insurance using an allowance set by their employer. 

While switching to ICHRA promised huge cost savings for Palisades Hospitality, it represented a big change for the company and its employees. The company needed to be sure individual insurance would work for all employees in order to retain top talent. Using Take Command’s advanced platform, Gordon and her team were able to model costs for staff members with specific coverage needs and then present the numbers to the C-suite. 

“There’s a really helpful ‘window shopping’ tool you get sent when working with the sales team at Take Command,” explained Gordon. “We were modeling for general managers, executive chefs, and employees we knew had lots of children on their coverage. We could see what was available to them and find out if there were plans available in their area. We were also modeling the cost. Was it going to cost the same, or would it be more expensive?”

Confident with the results, Palisades Hospitality leadership approved the proposal. Take Command and Palisades moved swiftly through the implementation process, setting the company up just in time for open enrollment to start. With Take Command, Palisades has been able to align individual coverage with the group plan they’re still managing in California — providing choice to every employee, regardless of where they live. Crucially for Palisades, support doesn’t end after implementation. Take Command continues to provide dedicated assistance, taking the burden off Gordon and her team. 

“Oftentimes in this industry, the home office departments are minuscule compared to the number of employees they have,” said Gordon. “We can’t handhold every single employee through every single step — it’s just not feasible. For any of our systems that have support, we’re very pushy at making sure employees know they have access to it. When they’ve needed it, they’ve taken advantage of Take Command support, and they’ve had great things to say.”

Results: More choice for employees, major savings for Palisades Hospitality

Implementing ICHRA with Take Command has transformed healthcare benefits for Palisades Hospitality Group and its employees. 

Workers across all locations now have a choice on healthcare. Employees can shop for their own insurance instead of facing an expensive group plan or going without coverage. The individual market offers lower costs to younger employees, and many people in the hospitality industry are in their 20s or early 30s; these employees only want basic coverage in case they get sick. With ICHRA, they don’t pay a penny out of pocket.

Palisades Hospitality is no longer at the mercy of unpredictable group renewals fueled by low participation. Before ICHRA, the company’s certainty was that costs would go up. Now, Palisades has budget stability. In a competitive industry with high turnover, Palisades can now offer all of their eligible employees affordable healthcare. Long term, this competitive advantage will help them retain and recruit the staff they need to continue thriving. 

“With ICHRA, the cost savings are there. Definitely for the employees, and definitely for the employer,” concluded Gordon.