Transitioning to a new way of offering health benefits can be overwhelming and costly. Not only can an Individual Coverage Health Reimbursement Arrangements (ICHRA) save you money on your health plan offerings in the long term, but partnering with a reliable partner will help cut costs and ensure you are sticking to your budget. Keeping in mind your budget and considering all required steps before implementation can result in huge savings. Consider the following ways to increase both your employees’ as well as your own savings when shifting to ICHRA.
1. Avoid Rising Group Insurance Rates by Switching to ICHRA
With the cost of traditional health benefits continuing to rise, companies are seeking a less expensive and more predictable alternative. In 2021, the average cost of employee health benefits is expected to rise by 5.3 % to reach $15,500, according to the 2021 Large Employers’ Health Care Strategy and Plan Design Survey. With employers covering an average of 82% of costs for a single employee, everyone will feel the effect of these rising prices.
ICHRA bypasses annual increases in health insurance costs by allowing employees to capitalize on savings that weren’t available to them under traditional group insurance. For example, the American Rescue Plan (ARP) lowered premiums on the ACA Marketplace and increased the availability of tax credits.
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.
2. Tax Breaks and Flexibility Increase Potential Savings with ICHRA
In addition to often being the cheaper alternative to traditional group insurance options for both employees and employers, ICHRA provides savings via tax breaks. For employees, previous non-deductible medical costs are reimbursed by the company tax free. ICHRA provides an easy way of utilizing pre-tax payroll contributions to cover everything from medical expenses to insurance premiums. Such a system allows employees to increase the amount of money they are taking home through pre-tax payroll deductions.
Employers can capitalize on the tax breaks that go hand in hand with ICHRA as well. Employers’ contributions to reimbursement accounts are tax deductible.
Employers decided how much they want to contribute to the employee reimbursement account. With no set maximum or minimum set, the flexibility of ICHRA helps employers accurately plan for the yearly health benefits expenses. Additionally, unused funds can either be rolled over to the next year or be transferred back to the company. Employer-set business rules decide how unused funds are dealt with and these considerations can be very advantageous when sticking to a set company budget.
3. Reduce Administrative Burden by Turning to the Experts When Implementing Your ICHRA Solution
Investing in a partner with a robust software early on can save your company headaches and money when setting up an ICHRA and maintaining it. Automating the process from start to finish with a reliable partner reduces company overhead and prevents you from having to compensate additional vendors.
Outsourcing compliance to strict federal law and IRS regulation will prevent fees from racking up and unnecessary system downtime.
A technology partner can ensure:
- Safekeeping of protected health information on all fronts.
- Robust documentation regarding legal provisions.
- Peace of mind concerning compliance changes.
Count on the experts to get the job done right the first time around by partnering with a vendor who can ensure that all portions of your ICHRA solution are accounted for. In addition to the initial ICHRA set-up, employee communication, account analytics, ongoing compliance, and so much more are needed to make sure everything runs smoothly. Shop around for your ICHRA partner to ensure you are getting the best deal and a one-stop shop for all your ICHRA-related needs.
Before you jump into any kind of agreement, follow these tips and start saving money on your ICHRA solution today. Partnering with W3ll provides you with the expertise, knowledge, affordability, and long-term capabilities you need. Contact us today to explore our valuable partnership opportunities. We can offer the tools and support to help you develop, launch, and maintain an ICHRA offering that meets your needs on a budget.