As a business owner, you’re savvy about making decisions for your company. You consider all objective benefits and disadvantages before taking the leap. You crunch numbers and review all available metrics. And when it comes to choosing an ICHRA (Individual Coverage Health Reimbursement Arrangement) health insurance benefit offering for your employees, you’ll apply the same level of vetting and dedicated consideration.
What might be helpful to your process is seeing how the various options stack up in direct comparisons. Self-insured, Fully Funded group plans, and QSEHRAs (Qualified Small Employer Health Reimbursement Arrangements) are all on the docket today. Here’s how these three shake out in an apples-to-apples comparison with ICHRAs. We’ll look at costs, size requirements, and maximum contributions. It can be a helpful guide as you make the best health benefits decision for your company and staff.
ICHRA in Comparison to Self-Insured
If you’ve been contemplating going the Self-Insured route, you’re not alone. Many companies find these benefits platforms to be most beneficial, based on their business models. And the employer gets to control the data and payments without lofty group plan premiums to pay. But here’s how a Self-Insured option compares to an ICHRA in terms of costs, size requirements, and maximum contributions.
The costs of a Self-Insured benefits plan are uncertain and will vary by employer. Usually, these are based on the number of employees covered and their anticipated health claims throughout the plan period. Neither of those factors is easy to control or predict. The costs of an ICHRA are predetermined based on the budget you have available.
When it comes to size requirements, in terms of minimum or maximum numbers of employees, both the Self-Insured method and the ICHRA are open to any business size. So, whether you only have two employees or two hundred employees, either benefits offering is acceptable. This usually is appealing to the smaller businesses, with fewer employees to insure.
You may be wondering about contribution maximums for the Self-Insured versus the ICHRA solution. Much like the size requirements, both benefits options shake out the same with no maximum contribution requirements. Knowing there are no limits on contributions means the employer will enjoy a greater leeway and flexibility in budgeting for growth over time.
ICHRA in Comparison to QSEHRA
You might have previously considered a QSEHRA and now want to know the key differences between those and the ICHRA that everyone’s buzzing about lately. Here’s how they compare, again based on size, contribution, and overall costs. But, here’s a hint – the ICHRA is a far better plan offering for the employer bottom line and participating employees alike.
Costs for either the QSEHRA or the ICHRA should be relatively similar. Both can be determined according to company budgets. However, it’s important to distinguish that the costs do vary when it comes to employee coverage. With the ICHRA, an employee must be enrolled in a health plan, either through an individual offering, the Marketplace, or Medicare. However, employees using a QSEHRA, employees without health insurance, alternative care, or coverage with a spouse’s plan do qualify.
There are differences to note in the QSEHRA and ICHRA comparison. A QSEHRA is only a viable option if your business employs 50 or fewer staff members without a group health insurance plan. An ICHRA, on the other hand, is applicable regardless of the business size. And the ICHRA can be offered with a traditional group plan, as long as the employee classes are different for each.
The QSEHRA has annual caps, determined by the IRS, that businesses cannot exceed for reimbursements. The IRS will revisit these limits annually. However, with the ICHRA, there are no maximum contribution caps to consider, regardless of company size or budget.
ICHRA in Comparison to Fully Funded
A Fully Funded plan is a coverage option you choose when your insurance carrier handles all the claims and associated health data for employees. It’s a great option if you want minimal burdens on your internal staff to handle the paperwork, data, and payments. Unlike the Self-Funded plans, where the sponsoring company handles all of those responsibilities, the Fully Funded plan can be a great benefits solution. But you might think differently when you review the comparison details between the Fully Funded plans and an ICHRA.
In a Fully Funded plan, the employer pays the premiums to the selected insurance carrier. And these premiums are typically fixed rates, dependent on the number of employees enrolled each month. That idea might sound tempting. But monthly group plan rates can be much higher than the flexible and budget-based reimbursement limits of an ICHRA. With the ICHRA, too, the employer reimburses for qualifying medical expenses (QMEs) based on actual employee out-of-pocket costs, which they’ll love.
Any size company can opt for the group health plan and Fully Funded model. But, again, there aren’t size requirements on the ICHRA model either. Companies with one or more employees can select either plan type. But we might refer you back to the cost factor since smaller businesses can adjust the ICHRA budgets, whereas the Fully Funded plans are locked into group rates.
When it comes to maximum contribution limits, neither the group variation or Fully Funded plan nor the ICHRA possesses those caps. Meaning either benefits offering is scalable with company growth and onboarding new employees over time. However, you’ll pay a significant difference.
When you’re ready to make your company decision regarding which health insurance benefits platform works best, review these comparison points. Your company will prioritize factors differently. But in general, cost, size requirements, and max contributions matter more frequently among leaders.
And when you’re ready to jump on board with the ICHRA, let W3LL be your guide. From calculating costs and performing comparisons of all your potential benefits options, we can help. And the ICHRA might just be the best-fit health insurance platform for your company, as it’s proving to be for so many.
|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 from scratch with over $7.2MM in annualized premium, Pete has done it all.