Healthcare, in general, has evolved over the years with advancements in medicine and new technologies. It used to be that patients would visit one primary doctor who helped manage all care efforts. But now, niche medical sciences and support services are how consumers seek remedies for specific needs. And it’s those ancillary products and services that help create a path to whole wellness.
In terms of health insurance, many providers have shifted coverage options to include some of the ancillary products and services that patients take advantage of most today. And the ACA Marketplace also offers provisions for certain ancillary coverage. But as a business, either adopting or considering an Individual Coverage Health Reimbursement Arrangement or the ICHRA, you’re wondering how your model fits together with these necessary ancillary menus of services.
Ancillary healthcare products and services serve a vital role in today’s healthcare movement. Thousands of Americans use these niche services and rely on them for basic and necessary treatments. Today, we’ll outline how ICHRAs work with ancillary products to help you better understand the coverage structures as well as cost and eligibility parameters.
What Are the Categories of Ancillary Products and Services?
In the health and wellness arena, ancillary services, also sometimes referred to as ancillary care, is the broad spectrum of both diagnostic and support services provided, as an assistant feature to help the work of physicians, specialists, nurses, and dentists. Doctors and primary care physicians will often seek the help of ancillary providers in treating an injury, providing diagnosis, or leveraging specific treatments. Ancillary services typically fall into one of three distinct categories.
Diagnostic Services
Diagnostic services are generally required when patients need short-term and acute information about immediate conditions. These services often happen in hospital settings and at the request of the primary care physicians. Typically, these services include laboratory testing, like bloodwork or urinalysis. They also encompass imaging, including X-rays, MRIs, ultrasounds, and CT scans. In some instances, genetic testing is also included. As an example, that’s why patients are used to seeing an invoice for a hospital visit, along with other invoices representing the various professionals and ancillary products involved during that visit.
Therapeutic Services
In addition to diagnostic ancillary services, there are also therapeutic efforts. These types of services usually encompass treatment over the longer term. Occupational therapy, physical therapy, and speech therapy fall into this ancillary category. Psychotherapy is also considered to be a therapeutic ancillary service. These ancillary products and services are necessary for rehabilitation and represent ongoing costs over a scheduled period of time.
Custodial Services
Ancillary care also refers to some of the more permanent or long-term care associated with health treatments. Custodial services refer to the aid often sought out to help treat patients in an at-home environment when possible. Hospice care, home healthcare, rehabilitation facility care, and nursing facilities all fall into this ancillary care category. These costs tend to be recurring over weeks or months to ensure the quality of care.
Understanding the ICHRA Coverage Model
As your business explores ICHRA options, you’ll first recognize that it doesn’t provide coverage directly. Rather, it provides an affordable and flexible reimbursement platform, so participating employees can choose and manage the care they need, usually through the ACA Marketplace, and seek reimbursements for precise out-of-pocket care costs.
The ICHRA and ACA Marketplace
Employees opting into an ICHRA will have a designated period of time to secure and provide purchase proof of a health insurance plan of their choice. In addition, the ACA Marketplace offers the premium tax credits and catered plan offerings that many can explore as ideal coverage. In most scenarios, employees can be reimbursed for copays, deductibles, and even premiums.
ICHRA Reimbursement Parameters
Companies offering ICHRAs will outline reimbursement definitions based on IRS requirements and within company budgets. You can set payment schedules and guidelines for employees to follow when submitting receipts and receiving reimbursements. Adopting an ICHRA means being able to choose what your model reimburses, insurance premiums only, qualified medical expenses only, or both insurance premiums and qualified medical expenses.
Qualifying Medical Expenses
The IRS defines qualified medical expenses in publication 502. These services tend to include a variety of services, like physician visits, prescription medications, copays, medical equipment, and more. Your company ICHRA can outline which of these types of services fall into eligibility for reimbursement.
How ICHRAs and Ancillary Products Work Together
So, how do these needed ancillary services work together with a company-established ICHRA? There are guidelines to follow, along with basic definitions of what can be covered or not. Here’s what you need to know.
What’s Covered
It’s important to know that ICHRAs can be offered in conjunction with and alongside ancillary products and services. Out-of-pocket expenses regarding diagnostic, therapeutic, and custodial ancillary services. However, those ICHRA contributions cannot be used to directly pay for the premiums of some of those ancillary products, like dental or vision plan premiums. Vision and dental plans can be reimbursable as long as you’re also enrolled in one of those specifically categorized qualified plans.
What’s Not Covered
Other products that technically fall into the realm of supporting healthcare services or wellness recommendations, especially over-the-counter remedies, tend to fall into the ineligible category of products. For example, medicated shampoos, fiber supplements, vitamins, or acne treatments are ineligible for reimbursement. In addition, some non-deductible medical expenses, like gym memberships, commuting expenses, and non-prescription drugs, are often also excluded.
How W3LL Can Help
The definitions and official IRS guidelines can be confusing for any business first looking to the ICHRA model as the ideal solution. And you may ultimately decide that you don’t want to tackle setting up the ICHRA alone, especially with the various nuances of eligible reimbursements and ancillary products. W3LL can be the partner you need to ensure you remain compliant through every setup and execution step. And we can help you stay on top of any changes to policies along the way.
Connect with W3LL today to learn more about ancillary products, ICHRAs, and where to get started in developing your company benefits platform
