The Individual Coverage Health Reimbursement Arrangement (ICHRA) model offers employers a simpler way to provide personalized and affordable health insurance to their employees. ICHRA represents a new, more flexible, and personalized model of employer-sponsored health insurance that eliminates the risks associated with traditional group plans. An ICHRA allows employers to control costs, eliminate the risks and headaches associated with managing health benefits, and align with recent legislation supporting the model.
1. ICHRA Controls Health Plan Costs While Stabilizing the Company Budget
As health care costs continue to rise, individual plans became the more affordable option for employers. Instead of sacrificing either the yearly budget or high-quality health benefits for employees, more and more employers are considering the transition to an ICHRA solution.
Accurately Plan Your Annual Healthcare Budget
Unlike traditional group plans that continue to rise in price, ICHRA allows employers to set reimbursement amounts. The average cost of traditional group plans has been steadily increasing by 3% to 5% over the past several years. Renewal season has been plagued with group insurance prices hikes that few companies can comfortably afford.
If you are an employer, and premium increases for group health plans have been a pain point for you in the past, ICHRA could be the answer. You set the maximum allowable reimbursement rates, along with what the money can be spent on. Surprise price spikes are a worry of the past with ICHRA. Employees will be able to select the plan that best suits their needs, and employers only reimburse employees for what they use.
Employers Decided How to Use Leftover Funds
Based on employer-set ICHRA rules, any unused allowance can either roll over to the next plan year or return to the employer’s pocket. The ability to select how company funds will be used will provide greater stability to the company’s budget and prevent any surprises. An ICHRA provides the freedom of choice over more traditional group plans.
Take Advantage of Tax Exemption
With 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.
Any out-of-pocket expenses related to health and wellness can then be submitted to the employer for a tax-free reimbursement. This model allows individuals to control and manage their costs better without making those expensive payroll contributions associated with traditional group health plans.
2. Reduce Time Spent Managing Employees’ Health Risks
An ICHRA allows employers to take a backseat to managing health insurance offerings and focus more on growing their businesses.
Place More Power in the Hands of the Employees
Employers no longer need to spend their valuable time working out the right group plan to meet everyone’s needs, or they have the headache of administering the group plan. The employer chooses the dollar amount they want for the ICHRA benefit per class, and the employee takes care of the rest.
An ICHRA grants 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.
Customized Coverage Based on Employee Classes
An ICHRA allows for various reimbursement caps for the 11 different employee classes. This allows for employers to still offer part-time, seasonal, and other non-full-time employees to capitalize on health benefits without adding risk or a large financial burden.
Simplify the Confusing Renewal Process
Switching over to an ICHRA allows employers the freedom to avoid yearly renewal process negotiations while effortlessly adapting to fit the changing needs of the company.
Getting everything aligned to implement a new vendor, negotiating annual rates, and ensuring the best plans for your employees is a massive undertaking for companies. ICHRA simplifies the process for future years by eliminating the need for employers to select health insurance vendors and specific plans. Businesses recognize that they can reduce risks by removing the need to manage renewals. Instead of trying to choose a plan that fits every employee’s provider network, it may be time for an ICHRA.
3. The ACA Marketplace Reaches a New Level of Stability
President Biden’s commitment to making health care more affordable and accessible means now is the perfect time to get started with an ICHRA. Recent legislation and the vocal support of the ACA Marketplace and ICHRA reduce associated risks.
Legislation Reduces the Cost of Individual Plans on the ACA Marketplace
The cost of plans on the ACA Marketplace continues to become more affordable and decreases the risks associated with ICHRA due to increasing Marketplace stability.
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.
Increased Premium Tax Credit Subsidies
The premium tax credits, designed to offset the costs of individual monthly premiums, saw a boost in funding. The executive order directs the additional savings to be applicable for those exploring the Marketplace plans now, as well as those who already enrolled in an ACA health insurance plan during traditional open enrollment. This measure alone is attracting existing and new members to the Marketplace and is also enticing to the providers who offer plans there. The potential growth is unparalleled.
Increased Participates Stabilize the ICHRA Model
More than just traditional retail businesses are adopting ICHRA benefits. Non-profit organizations represent 20 percent of the current ICHRA participation rates. Citing benefits like budget control and reimbursement flexibility, companies across a variety of sizes and industries are leveraging ICHRAs with open arms.
The recent surge in energy and support for the ACA is only making the ICHRA model more attractive to both employers and individuals alike. As more employers capitalize on the ICHRA model, the more stable it becomes. All forecasts point in the direction of rapid growth for the ICHRA model.
If you’re ready to explore your ICHRA options, contact W3LL! We can help you from inception to integration and beyond to ensure your business realizes the financial benefits countless other companies are already leveraging. Let us manage all the details, bring the tools needed for a successful ICHRA program.