When looking for a group health plan, the options are limited and far from ideal for many organizations. What works for one employee might not necessarily be the right fit for another, and the ideal benefits package—from both the employee’s and the employer’s perspective—likely differs vastly based on age, geographic location, family size, health history, and more. This is why many of our customers ask us if they can offer their employees a traditional group health plan and an Individual Coverage Health Reimbursement Arrangement (ICHRA).
In short, the answer to that question is yes, you can offer your workforce both. However, these options have stipulations based on how you classify your employees.
To clarify, you can offer group health insurance and an ICHRA, but you cannot offer both options to the same employees: You must offer either a traditional group plan or an ICHRA to provide each employee class.
For example, while a traditional group plan might benefit your on-site full-time employees, it might make less sense for your remote part-time workers. However, you still want to offer benefits to all classes of workers within your organization, so in this case, you might offer a traditional group plan to full-time workers and an ICHRA to your part-time workers. As an organization, you can choose which option would best suit each class.
Eleven employee classifications can be used to determine ICHRA eligibility and allowance amounts. These classifications differ based on several factors, including whether employees make an hourly wage (full-time and part-time versus salaried, for example), live in different geographic locations and rating areas, are under a seasonal or temporary contract, and more.
Yes, their specific classifications are different, but their right to access equitable healthcare is not. Obtaining sufficient health coverage, however, is easier said than done for many, and the one-size-fits-all approach of old does not adequately address the wide spectrum of healthcare needs today.
That’s why many of our customers are drawn to an ICHRA in the first place — options (lots of them) for everyone.
Nearly 90% of HR and finance leaders across the U.S. who took part in SureCo’s 2024 State of Employee Health Benefits survey and were not on an ICHRA said their workers wanted more plan options. Almost 60% of employees polled expressed a willingness to leave their current position for a new role with better health benefits.
Offering those employees a wider variety of options could improve retention, save your organization valuable time and money in turnover costs, and improve the livelihoods of your workers. Further, including an ICHRA in those options allows organizations to expand their benefits offerings to employee classes, like part-time and temporary staffers, who are often left to fend for themselves regarding healthcare.
It’s a win-win, right? We sure think so, but we understand that not all of our customers are ready to leap into what feels like the unknown of completely leaving traditional group plans in the past all at once. Offering an ICHRA or traditional group plan based on employee classifications is a great way to dip your toe in the water before running into the deep end and shouting, “Cannonball!”
This hybrid option is one that our customer, Christina Zdanis, the Head of Human Resources for ClearPlan LLC, decided to use when building her team’s 2024 benefits package.
She began exploring an ICHRA after receiving an initial 44% renewal increase quote for 2023. When ClearPlan’s 2024 rate came in, it was only a 5% increase, so it didn’t make sense for the organization to make the switch entirely. Still, Zdanis was intrigued by the concept and knew she was only one or two high claims away from seeing those double-digit increases again.
ClearPlan ultimately chose to pilot an ICHRA program this year with its employees in Alabama, who were generally unsatisfied with their group plan options. If it goes well, Zdanis says ClearPlan will likely extend the ICHRA offerings to all their employees during the next open enrollment period.
For now, providing both options was the best fit for ClearPlan’s staff, but most of our customers—95%—ultimately decide to offer an ICHRA to all their employees. In doing so, they can reduce their premium costs by an average of 22%.
We understand that the decision to offer personalized benefits solutions based on how your employees are classified can initially seem daunting. But our benefits experts can help simplify the process for your human resources personnel and the rest of your organization.
Schedule a quick 15-minute call to learn how we can help provide your workforce with the options they deserve.
