Healthcare is expensive, and you probably won’t find anyone on either side of the political aisle who will disagree with you. The costs associated with prescriptions, medical specialist visits, scans, and treatments are skyrocketing in recent years. And now, we have a nationwide pandemic to contend with, meaning more Americans are susceptible to potential illness and will be ever reliant on their health insurance plans.
Looking at today’s health concerns and increasing financial burdens through the lens of an employer is an entirely unique view. Businesses small and large are also feeling the pressures of those increased healthcare costs. Companies are continually exploring health insurance options that offer higher-quality benefits and more affordable coverage for their employees and their bottom lines. And it’s the Individual Coverage Health Reimbursement Arrangement (ICHRA) that may prove to be the game-changer that benefits both employers and their roster of valued employees.
What Is ICHRA?
The Individual Coverage Health Reimbursement Arrangement (ICHRA,) often pronounced “ick-rah” by benefits vendors, is new and launched earlier this year. It’s an innovative way for organizations of any size or structure to establish health insurance options to offer their employees and staff.
The ICHRA Process
It’s a model based on employee reimbursement in a tax-free capacity. And like traditional HRAs, the ICHRA provides a simplified, four-step process.
1. The company selects a plan allowance based on affordability guidelines.
2. Employees then pay for healthcare policies and services.
3. Employees submit receipts and proof of those out-of-pocket expenses.
4. The company reimburses the employee for the approved costs within the original guidelines.
How Individual Coverage Health Reimbursement Arrangement (ICHRA) Differs from HRAs
There are quite a few critical and significant differences between the ICHRA model and traditional Health Reimbursement Arrangements (HRAs.) However, there are two key differentiators. An ICHRA can include reimbursements to employees to cover individual health insurance premiums. More traditional HRAs cannot. Also, unlike those HRAs, the ICHRA is designed to work with individual health insurance plans instead of a mandated integration into an employer group plan.
Differences Between QSEHRA and ICHRA
Small employers that don’t have the means, necessarily, to offer group health coverage will sometimes tap into the benefits of the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA.) And while there are similarities between the QSEHRA and the ICHRA, there are also differences. For example, QSEHRAs have company contribution limits, whereas the ICHRAs do not. And the ICHRA encompasses far more employee types and can be a health benefits solution for any sized business, not just those with 50 or fewer employees.
Employers Armed to Control Costs
Companies know that to attract and retain their best employees, they have to offer a robust benefits package. But the best company and group plan costs are skyrocketing just as fast as individual health care is. And not all businesses can afford the buy-in for some of the group plans, that in the end, prove to also be costly at the employee contribution level.
A Game-Changing Business Solution
The ICHRA is the solution for those companies who want to offer substantial benefits without losing control of their internal budgets. Companies can regulate the reimbursement margins and take advantage of the tax-free benefits. And organizations will pay out based on actual expenses incurred by their employees, which is a great way to improve both employer and employee finances. In a way, ICHRA allows companies to explore more cost-effective health insurance offerings for everyone involved, which is welcomed savings since so many employers and individuals alike are still financially reeling from pandemic shutdowns and a stifled economy this year.
Ability to Offer Coverage to Several Types of Employees
Participating businesses can select a monthly amount they can afford to offer as available, tax-free funds to their staff. There are no minimum stipulations, nor maximum requirements for the contribution amounts selected. And all types of employees can be included in these plans. Full and part-time positions can leverage these flexible spending benefits. But even seasonal staff, hourly workers, salaried positions, and temporary employees working for the participating company can enjoy the ICHRA flexibility.
Greater Flexibility for Employees
The ICHRA isn’t just a welcomed option for employers. Employees who are allowed the freedom to make their own health care choices are equally appreciative of the ICHRA model. Healthcare is made simple at the individual level. Employees buy their own health care based on their personal choice of doctors and healthcare providers. This also includes an individual health insurance plan. Workers can use the health services they need, then provide proof of the expense, either with a paid receipt, organization invoice, or insurance explanation of benefits. Once approved, the employer can authorize a reimbursement that can usually come in the form of an addition on the employee’s next paycheck.
What ICHRA Means for Health Insurance Plans
Individual Coverage Health Reimbursement Arrangement (ICHRA) is so much simpler for both businesses and participating employees to leverage than the old-fashioned and more traditional group benefit plans.
A Simplified Setup
It’s a cost-saving game-changer for companies looking to enhance their health benefits offerings without upending the budget. But you must first decide which ICHRA coverage options fit your needs best. Many employers reference the
provided by Healthcare.gov to get started. It only takes a few basic initiation steps to set up the ICHRA plan as an employer. One of the first decisions will be to determine who will be eligible. You can then establish the employee allowance amounts according to your budget and within an affordable range for your staff.
A Simplified Process for Participation
Once your legal plan documents are outlined, and a start date is decided, employers can then communicate the ICHRA model to all members of the organization. Employees, while usually grateful for the flexibility to incorporate their own healthcare preferences, may still need some guidance to help. It’s not uncommon for companies to provide support and resources to help guide their staff through selecting individual health insurance options.
Good News for Everyone
The 2020 introduction of the Individual Coverage Health Reimbursement Arrangement (ICHRA) is good news for small, large, and non-profit organizations looking to enhance the quality of health benefits for their employees. It’s a benefits solution that also provides cost-savings at both the employer and employee levels. Companies only reimburse based on actual expenses. Staff members only spend where and when they need to do so. ICHRA may just be the game-changer that offers a win-win for everyone.
To learn more about integrating an ICHRA platform for your company, get support, and up-to-date information from the professionals at W3ll.