There is a great deal of talk in recent weeks about the Individual Coverage Health Reimbursement Arrangement (ICHRA). Often viewed as a super-charged version of the older Qualified Small Employer Health Reimbursement Arrangement (QSEHRA,) this model allows employers to offer tax-free health insurance reimbursements. And while it gained serious traction upon its launch in January of 2020, it’s only exploding in popularity this year. The renewed energy and support for the Affordable Care Act is positioning the ICHRA in a position to experience unparalleled growth. If you haven’t yet explored the many ICHRA benefits for your business and staff, now is an excellent time to take a look.
A Surge in Support & Energy with the ACA
As part of the relief efforts to assist Americans and companies in rebounding from the pandemic, there has been significant energy and renewed support for the ACA. Based on the economic effects of 2020, individuals and businesses have new needs that the ACA is primed to meet. These trends and policies are driving more interest into the ICHRA solution, as well.
The American Rescue Plan Act
Effective March 11, 2021, the American Rescue Plan Act introduced a temporary expansion of the ACA. The premium tax credits previously available to qualifying individuals are receiving additional funding, making even more cost savings attainable for millions of eligible Americans. The ARP also leverages better financial incentives for states to improve the availability of their Medicaid programs.
Providers Rejoining the Marketplace
Health insurance providers have been joining the Marketplace to offer health plans at a growing rate over the last three years. The Kaiser Family Foundation (KFF) shared an additional 30 insurers jumped in across 20 different states already this year. Another 61 health insurance companies have expanded their service regions to grow their footprint of available plans. And while the trends suggest even more are flooding into the ACA market, there is already an average of five insurance providers per state, from which individuals can choose.
The ACA may have originally been designed to meet the needs of Americans who either didn’t have health insurance or couldn’t afford an employer-sponsored plan. But in today’s environment, even more individuals are finding affordable health plans and meeting eligibility requirements, prompting millions to enroll. Enrollment numbers reportedly surged 6.6 percent in 2020. And according to some CMS data, open enrollment for 2021 welcomed more than eight million people into the ACA federal exchange.
The ICHRA Model Is Already Popular
The ICHRA model was a welcome solution to countless businesses before the pandemic shutdowns and economic shuttering. And since then, more companies are feeling the budget crunch than ever before and desperate for more affordable and flexible ways to offer employee benefits. The ICHRA is already strong and positioned for continued growth as a result.
Businesses Realizing the Many ICHRA Benefits
SHRM shared interesting results of various surveys related to the 2020 business adoption of ICHRAs. There is an ever-growing interest in businesses looking to take advantage of the fixed dollar amount design of the ICHRA. In one poll that surveyed 397 large employers, nearly 15 percent said they were considering offering ICHRAs in 2022. Some 22 percent of retail and wholesale-related employers were planning to do the same. And of the 54 CFOs who participated in the survey, one-third agreed they were considering the ICHRA solution as a benefits offering for some of their active employees.
Pandemic Conditions Making the ICHRA More Attractive
It’s evident the pandemic is driving continued interest in ICHRAs. For many U.S. employers, experiencing early 2020 shutdowns significantly impacted year-end revenue. And as the economy looks to rebound and reopen, those businesses are in desperate need of more affordable options for employee benefits. The expensive premiums associated with traditional group health insurance plans are no longer sustainable. And the word is getting out about just how beneficial the ICHRA is for both employers and employees.
Early Adoption Data
Other early adoption metrics suggest most businesses offered ICHRA plans to salaried and full-time hourly employees. And ICHRAs are proving to be more popular in those states with already robust individual markets. Some data shows roughly 16% of ICHRA participating companies are mid-sized, with fewer than 50 staff members. Another six percent represent large employers, and the remaining represent small businesses with fewer than ten workers.
Renewed Energy Translates to Potential for Unparalleled Growth
As more Americans fall into the eligible category for ACA participation, the current policymakers in Washington are surging funds and support to the platform. With the economic hardships that are facing U.S. employers, there is also a financial hardship facing individuals. Considering that more of them are falling below the poverty line threshold requirements, the ACA is now positioned to deliver the best options for affordable health insurance for everyone. The ICHRA model directs employees to the exchanges to choose their own plans in order to be eligible for company reimbursements. And now, the incentives are even more robust.
Increased Premium Tax Credit Subsidies
The premium tax credits, designed to offset the costs of individual monthly premiums, saw a boost in funding. The executive order directs the additional savings to be applicable for those exploring the Marketplace plans now, as well as those who already enrolled in an ACA health insurance plan during traditional open enrollment. This measure alone is attracting existing and new individuals to the Marketplace, also enticing to the providers who offer plans there. The potential growth is unparalleled.
Special Enrollment Period Providing More Time
Part of the American Rescue Plan Act includes an extension of the special enrollment period for all Americans to explore their eligibility options on the Marketplace. And with the prolonged pressures of household finances, families are embracing the extra timeline to explore additional savings and eligibility. Companies using ICHRAs are equally benefiting as the reimbursement expenses are expected to be affected, as well.
Organizations Flocking to the ICHRA Model
More than just traditional retail businesses are adopting ICHRA benefits. Some sources suggest non-profit organizations represent 20 percent of the current ICHRA participation rates. And when the average reimbursement rates, $749.93 for individuals and roughly $931.95 for families, represent fractions of the expenses associated with lofty group plan rates, affordability is driving increased ICHRA participation. Citing benefits like budget control and reimbursement flexibility, companies across a variety of sizes and industries are leveraging ICHRAs with open arms.
The recent surge in energy and support for the ACA is only making the ICHRA model more attractive to both employers and individuals alike. If you’re ready to explore your ICHRA options, contact W3ll! We can help you from inception to integration and beyond to ensure your business realizes the financial benefits countless other companies are already leveraging.