As a business leader, you’re always looking for more efficient ways to improve your employees’ benefits plans. But you’re also mindful of your budgets. Considering today’s economic environment, you have to be savvy about which benefits you provide that make the most sense to both your teams and your bottom line. It’s this growing dynamic that drives the continued popularity of the Individual Coverage Health Reimbursement Arrangement or ICHRA (ick-rah.)
It’s a popular benefits model for a number of reasons, including affordability, company control of the platform, and increased acceptance among employees. And businesses large and small are already leveraging ICHRAs many benefits. What company leaders may not know is that choosing an ICHRA doesn’t force participants to stick with an ACA Marketplace plan. In fact, your eligible employees can choose whatever health coverage they prefer, including off-exchange. Here’s how off-exchange plans and ICHRA can work together to provide an added layer of coverage options for your employees.
The ICHRA Solutions Benefits Both Sides
With the rising cost of traditional group health plans, more and more companies are flocking to adopt the ICHRA model, which provides businesses with the ability to set reimbursement limits according to budgets. And the employees are rescued from the skyrocketing premiums, as well. Here’s how ICHRA benefits both employer and employee for maximum health coverage options.
Company Benefits
Companies enjoy other advantages with an ICHRA benefits platform. There is incredible flexibility allowing the employer to determine which reimbursements are eligible. Companies can also extend reimbursements beyond full-timers to include part-time workers, temporary staff, and seasonal employees, as well.
Individual Benefits
From the perspective of the employee, the ICHRA makes sense all around. Instead of being forced into a group plan and tied to in-network provider constraints, participating employees can find and officially enroll in a health plan they choose based on their precise needs and household budgets. And any actual out-of-pocket costs, like prescriptions, monthly premiums, and copays, can all be part of the reimbursement model. For many employees, the ACA Marketplace coverage options are ideal, especially because of the premium tax credits that discount the monthly premiums based on income levels.
On-Exchange vs. Off-Exchange Health Plans
So, when employees are given the choice to select a health insurance plan, they can venture onto the ACA marketplace exchange, or they can browse available off-exchange plans. There are key differences in how both coverages typically work. And with an ICHRA in place, you’ll be wondering how the two differ.
On-Exchange Plans
When you’re buying a health plan on the exchange, it means you’re working through the Marketplace to shop for available plans that are governed by federal regulation. There are tiers of plans separated by monthly premiums and coverages. And because they’re regulated, essential health benefits are included in every plan, regardless of the provider. Shopping on the exchange also means candidates may be eligible for premium tax credits to help offset the monthly cost of insurance.
Off-Exchange Plans
When a health insurance plan is considered off-exchange, it means you’re buying directly from the insurance provider, like Aetna, Blue Cross Blue Shield, or Humana. Buying direct means you won’t have premium tax credits at your disposal. However, there could be additional layers of coverage and discounts available that make it the right plan for you.
ICHRAs Bridging the Gap to Off-Exchange Plans
ICHRAs are a great option for companies because they’re based on reimbursements and they are not responsible for providing coverage to employees. And when the employees can take control back in choosing their own insurance, they win, too. In rolling out your ICHRA, be sure to encourage your participants to explore plans on- and off-exchange because ICHRAs can reimburse out-of-pocket expenses regardless of the chosen health plan.
A Broader Selection of Health Plans for ICHRA Participants
The added benefit of ICHRAs is providing employees additional options for selecting plans that work for them specifically. Your employees may prefer to make decisions based on keeping their current doctors, while others are more concerned with low monthly premiums. Some might have health conditions or prioritize preventive care. Others could be young and healthy, looking only to keep the bare minimum coverage required. ICHRA allows everyone to find their perfect plan, both on and off-exchange, with reimbursements on either side of the Marketplace.
Going Beyond the ACA Marketplace
Don’t box in your employees with an expensive, traditional group plan. And you don’t have to force them to the ACA Marketplace, either. Instead, leverage the countless advantages of an ICHRA and let your teams decide what’s best for them. As their employer, you can support their decisions with reimbursements that can significantly impact how they take control and manage their health affordably.
If you still have ICHRA questions or want to learn more about on- and off-exchange plans, let W3LL help!
Pete English
With nearly two decades in health insurance, Pete English’s diverse experience makes him uniquely qualified to help health plans and brokers leverage innovative technology in partnership with W3LL. From growing sales staff by 126% over 4 years at a large health plan, to building his own health insurance brokerage firm with over $7.2MM in annualized premium, Pete has done it all.
