ICHRA and The American Rescue Plan

The American Rescue Plan (ARP) makes it much more affordable for individuals to secure coverage through the 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. Existing and new members are being drawn towards the Marketplace as higher-quality health care plans become available at a lower cost. Increased affordability and stability in the Marketplace create the need for businesses to re-evaluate their current health insurance offerings to capitalize on these savings.

ICHRA Allows Employees to Capitalize on Lower Marketplace Plan Prices

Individual Coverage Health Reimbursement Arrangements (ICHRA) allows employees to select their own healthcare, and they are then reimbursed by employers for qualified medical expenses and insurance premiums.

This hands-off approach to employers managing their own health insurance, instead of being trapped in the traditional one-size-fits-all plan for employees, grows even more appealing with the implementation of the ARP.

Lowered premiums offered across the board allow employees covered by ICHRA to enjoy high-quality plans available at a lower cost. Coupled with the reimbursed funds being tax-exempt, ICHRA’s flexibility in allowing employees to take advantage of Marketplace savings will greatly increase the availability of quality health plans.

Savings are not exclusive to employees. Based on employer-set-rules, ICHRA funds not used during the coverage year can be returned to the business instead of rolling over. 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.

Decline in the Traditional Group Plan Coupled with Increased Stability in the ACA Create New Opportunities for ICHRA

Climbing premium prices and a consistent reduction in enrollments forecast the end of small group plans. Their lack of flexibility makes them susceptible to sudden hikes in prices that most businesses cannot afford, and employees do not want to pay for.

With the ability for employers to set how much they are willing to reimburse, ICHRA provides customizable benefits without employers taking the costly hit of financing a group plan.

Employers are becoming more aware of the benefits of ICHRA over more traditional group plan options, and interest continues to increase. According to Willis Towers Watson’s 2020 Health Care Delivery Survey, 15 percent of polled employers were considering implementing ICHRA into their health benefit offerings by 2022.

Increased stability in the ACA Marketplace will continue this drive away from one-size-fits all health benefits and towards solutions customized to individual employees. Renewed support for the ACA has resulted in more than 200,000 Americans signing up for health coverage on federal exchanges during the first two weeks of the 2021 special pandemic enrollment period, trumping rates in 2020 and 2019.

Reduced rates due to the ARP will further increase members enrolling in the Marketplace. Employers should take advantage of this new opportunity and learn how ICHRA can benefit them.

Employees Offering ICHRA Must Comply to New COBRA Requirements

All employees and their family members covered by ICHRA are eligible for COBRA when they go through a qualifying life event, such as a divorce or a job loss. This coverage is typically offered for 18 months after a qualifying life event but can be extended up to 36 months.

The ARP extended COBRA for those who have been laid off, furloughed, or had their hours decreased and eliminated the need of COBRA premium payments for these individuals. This coverage will continue until September 30, 2021.

Employers offering ICHRA must be aware of these new requirements and adjust their coverage accordingly.

Employers ready to explore ICHRA options should contact us! W3LL can help develop a plan tailormade for specific company structure, budget, and employees.

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.