Group plans can be confusing and expensive, forcing one-size-fits-all plans without the possibility of customization. Companies are switching away from more traditional plans to those that offer the richest benefits while fitting into the budget.
Individual Coverage Health Reimbursement Arrangements (ICHRA) give employers a better, simplified option for offering health benefits. Employees can select their own qualifying coverage and are reimbursed through employer-run accounts. This benefits design makes their health insurance – like their health care – personalized.
1. Individual Plans are Less Expensive Compared to Group Plans
The average cost of group plans has been increasing annually for years. The steady rise of group plans’ out-of-pocket cost by 3% to 5% resulted in individual plans becoming the more affordable option for both employers and employees.
The instability associated with group plans leaves little to be desired and offering less expensive coverage will lead to limiting benefits parameters. Stop overspending on group plans while still offering robust coverage by designing an ICHRA solution to meets your business needs.
Recent Legislation Reduces the Cost of Individual Plans on the ACA Marketplace
The cost of individual plans is driven primarily by household income, resulting in affordable health insurance options to those who truly need it.
The American Rescue Plan (ARP) makes it much more affordable for individuals to secure coverage through the ACA Marketplace. The increased availability of tax credits to be used towards plan premiums and the reduction of the minimum contribution amount will lower plan costs.
Lowered premiums allow employees covered by ICHRA to enjoy high-quality plans available at a lower cost. Coupled with the reimbursed funds being tax-exempt, ICHRA allows employees to take advantage of Marketplace savings that would be unavailable if they were enrolled in a traditional group plan.
ICHRA Provides Savings for Employers
With group plans causing more expenses for businesses, ICHRA offers companies a way to accurately plan their budgets. Employers decide how much they want to contribute to an ICHRA reimbursement account to prevent unexpected expenses. Lower premiums can result in savings for the company as they adjust provided ICHRA funds to match the Marketplace prices and needs of their employees.
Increased stability in the ACA Marketplace, due to the recent influx of enrollees and increased savings, makes ICHRA the safer choice for employers looking to offer benefits.
Additionally, ICHRA funds not used during the coverage year can be returned to the company instead of rolling over based on employer-set rules.
2. ICHRA Has the Flexibility to Match Specific Insurance Coverage Needs
Traditional group plans often trap employees in one-size-fits-all plans that fail to account for individual healthcare needs. Having limited coverage options results in employees paying for coverage that they do not need while not being covered for what they do.
ICHRA allows employees to select their own healthcare, and they are then reimbursed by employers for qualified medical expenses and insurance premiums. This allows flexibility for employees to select and pay only for the coverage that they need by enrolling through the ACA Marketplace.
Employers Can Customize ICHRA to Meet Their Financial and Coverage Needs
Not only does ICHRA allow for employees to select their own health coverage, but employers can also adjust ICHRA rules to meet their specific business needs.
Under an ICHRA, employers can offer as much or as little as they want to their employees, if the amount is offered fairly to everyone.
Possible reimbursement categories include:
- Insurance premiums only.
- Insurance premiums + Qualified Medical Expenses.
- Qualified Medical Expenses only.
Additionally, employers can control reimbursement amounts across different employee classes and provide employees with more coverage options. The flexibility that ICHRA offers to both employees and employers marks a stark difference between ICHRA and group insurance.
3. Traditional Group Plans and ICHRA Can be Combined for a Customized Benefit Offering
The complete upheaval of group plans can be too sudden of a change for companies and employees that came to depend on them.
The ICHRA plan platform can be offered as a stand-alone benefit to employees or in tandem with a group plan. The employer can offer a traditional group plan to certain classes of their employees. The caveat is that they cannot offer a group plan and ICHRA to the same class. This flexibility allows companies to maintain a group plan for full-time or salaried staff and still offer ICHRA to part-time workers, temporary workers, and seasonal team members.
ICHRAs have eleven different classes that divide employees into different benefits levels. The employer has the option to use as few or as many as they choose. However, for some classes, there are minimum class sizes if the employer offers traditional group coverage to any of their employees.
The option of a hybrid health insurance options is one way to keep coverage costs low or begin the transition to an ICHRA solution for all employees.
When your company is ready to take the next step with setting up an ICHRA, you might still have some questions about getting started or exploring how to customize your process. Contact W3LL to explore getting your ICHRA in place and help you decide the best way forward. The days of one-size-fits-all group health insurance may be in the rearview mirror. For personalization and flexibility in employee reimbursement benefits, the ICHRA is a great option. And to help you launch yours, W3LL is a great partner.
We also have employees covered!
Those needing help understanding where to begin or need to enroll in a Marketplace health insurance plan because of an ICHRA plan at work, browse with W3LL. Our free service supplies the tools needed to sort and compare health insurance plans.