We all know that helping businesses find a healthcare solution that works for all their needs is a challenge, to say the least—and a costly one at that. With increasing rates and unsatisfactory coverage for many employees, many benefits consultants are seeking innovative ways to help employers provide healthcare benefits to their employees. In recent years, Individual Coverage Health Reimbursement Arrangements (ICHRAs) have emerged as a popular alternative to traditional employer-sponsored health insurance plans. Consider the many reasons the adoption rates of ICHRAs have been steadily increasing:
Cost Control and Predictability
For most employers, the rising costs associated with traditional group health insurance plans have become a major concern. One SureCo client was recently facing their second year of 25% renewal increases, but with ICHRA, the company saved 35% on year premiums. ICHRA offers a cost-effective solution by allowing employers to fix their healthcare budget in advance, determining the reimbursement amount they are willing to provide to their employees rather than paying a fixed premium for a one-size-fits-all insurance plan. This approach enables employers to accurately predict their healthcare expenditure while ensuring employees have access to the coverage they need.
Customization and Flexibility
One of the key factors driving the rise in ICHRA adoption rates is the flexibility it offers both employers and employees. Unlike traditional group health insurance plans, ICHRA allows employers to design tailored benefits packages that suit their employees' needs. Employers have the freedom to choose different reimbursement amounts for different employee classes or even individual employees. This can be particularly effective for companies that have remote and/or geographically diverse workforces. This customization empowers employees to select any carrier and plan available in their area that aligns with their specific requirements, including local networks, providing them with more control over their healthcare decisions.
Portability and Continuous Coverage
With ICHRA, employees get a unique advantage in terms of portability and continuous coverage. Unlike employer-sponsored group plans that typically end if an employee leaves the company, ICHRA is portable. When employees switch jobs, they can take their ICHRA benefits with them, ensuring uninterrupted coverage. This portability feature is especially valuable in fields with high turnover, like staffing agencies, and generally in a rapidly evolving job market where people frequently change employers or engage in entrepreneurial ventures.
Access to a Broader Range of Insurance Options
Traditional employer-sponsored health insurance plans often limit employees' choices to a predefined set of options. ICHRA, on the other hand, offers employees access to a wider range of health insurance plans in the individual market. This expanded selection empowers employees to choose plans that align with their specific healthcare needs, preferences, and budget. It also fosters competition among insurance providers, which can lead to better options and pricing for employees.
Simplified Administrative Processes
ICHRA simplifies administrative processes for employers. Instead of managing a group plan, employers set up and manage reimbursement accounts for their employees. This streamlined approach eliminates the administrative complexities associated with traditional group plans, such as plan selection, enrollment, claims management, and ACA compliance. For many hard working HR teams, the reduced administrative burden frees up time and resources that can be focused on other strategic initiatives.
For all these reasons and more, ICHRAs are here to stay and likely become an even more appealing option for many businesses. As the healthcare landscape continues to evolve, any healthcare benefits expert should be aware of the increasingly significant role ICHRAs will have in shaping how employers provide health benefits to their workforce.
Want to know more about this revolutionary solution for employee health benefits? Check out our comprehensive guide to the most-frequently asked questions about ICHRAs.
