Many industries are grappling with increasingly complex healthcare needs as workforce dynamics shift. Things like remote, hybrid, and gig work, for example, continue to change the healthcare landscape, and benefits leaders are looking for novel solutions. For industries with issues like low plan participation and high turnover, traditional group health insurance can be a burden—those kinds of issues can push costs up, and that’s bad for employers and employees alike.
The good news? An Individual Coverage Health Reimbursement Arrange, or ICHRA, can help.
ICHRA is a flexible and cost-effective federal healthcare option that lets employees choose the right coverage for their needs. With ICHRA, instead of negotiating a complex group health insurance plan, employers simply set aside a sum of tax-free money for each worker’s healthcare expenses. Then, they let employees select their own health plans from the individual marketplace.
If you’re a broker looking to support clients with tricky workforce considerations like the ones below, ICHRA might be just the tool you need.
High Turnover
Retail, restaurants, gig work, and seasonal work are among the industries that face high turnover, but many companies in those industries are required by law to provide health benefits to some or all of their workers. For industries with high turnover, traditional group health insurance can be prohibitively expensive—an unstable risk pool can cause premiums to spike, and the administrative burden of constantly adding and removing employees from a group plan can be costly.
With ICHRA, employers only have to budget for each worker’s healthcare stipend instead of unpredictable premium costs. Employees can choose to use the cash or not, and costs won’t spike for the company based on changes in the workforce that it can’t control. Plus, employers don’t have to negotiate premiums yearly, on- and off-board employees to group health plans as they come and go, or worry about the consequences of limited employee engagement in a group plan, which can happen in high-turnover situations.
Participation Issues
Traditional group health insurance plans often require a minimum level of employee participation for the best price and coverage. But if the group plan doesn’t cover an employee’s preferred providers or offer enough options in the area where a remote employee lives, they may opt out of their employer’s plan. And if too few employees sign up, there can be a host of consequences, including higher premium costs and fewer available coverage options. That can make the health plan even less attractive to current employees. Long term, businesses could see issues with recruitment and retention since a quality health plan is important to employees: SureCo's 2024 State of Employee Health Benefits Survey found that 59 percent of employees surveyed said they’d switch jobs for a role with better benefits.
An ICHRA mitigates these issues. Since it’s flexible and allows employees to choose a plan that suits their needs, they can take advantage of tax-free money offered by their employers to find the right plan for themselves or their families. Employers don’t have to worry about budgeting for ever-rising premium costs or abrupt changes in coverage that result from low plan enrollment—instead, they can empower their workers to find coverage that fits.
Contribution Concerns
Companies with at least 50 full-time (or full-time equivalent) employees are required by the Affordable Care Act to provide a certain level of healthcare coverage to their workers, but budgeting for those costs can be a real burden in an era of rising premiums. Rapidly growing businesses, such as startups, can face particularly complex challenges since they may go from fewer than 50 employees to more than 50 employees quickly and suddenly be required to provide qualified health insurance.
An ICHRA makes it simple for industries with contribution concerns to offer health insurance. The main reason: It provides cost control. Since employers decide the healthcare allowance for employees, they can budget once and adjust as needed without having to deal with the frustrations of traditional premium costs. SureCo has helped many companies save on contribution costs—one non-profit we worked with, RFK Community Alliance, saved $1.4 million on premiums by working with SureCo to switch to an ICHRA.
Workers in Multiple States
We know that remote work is here to stay. More employers are seeing the benefit of having employees work where they like across the nation, and some estimates suggest that up to 22% of the US workforce will be working from home by 2025. That’s an exciting prospect for many, but it poses challenges for benefits administrators. How do you provide health insurance your employees actually want when traditional group benefits will work for some but not all?
ICHRA can offer a simple solution for companies with a large share of remote workers. By providing a predictable, consistent stipend, employers can offer an attractive plan to current and prospective workers, wherever they may be. Employees can seek out the health insurance they need and stick with it—no more worrying about the abrupt carrier changes or large cost increases that can come with a group plan. ICHRA is a truly modern solution for a modern workforce.
Want to know if your trickiest clients might benefit from an ICHRA? Schedule a 15-minute call with a SureCo benefits advisor today to talk strategy.
