It’s no secret that traditional group health insurance is broken. The model hasn’t changed since World War II, but the way we work and live certainly has. Whether it’s because of where employees live, their budget, or specific medical concerns they may have, today’s workers need more choice when it comes to coverage. On the flip side, employers need to be able to offer quality, affordable benefits in order to attract and retain talent. But they also need to control costs and maintain price predictability for their premiums.
Recent changes to regulations, which SureCo helped pass, enable both parties to get what they want.
Enter: the ICHRA.
Individual health reimbursement arrangements, or ICHRAs, allow companies of all sizes to reimburse employees pre-tax for any plan of their choice on the individual market. It’s a practice that was previously banned under the Affordable Care Act (ACA) but is now fully compliant—and gaining traction.
Despite their surge in popularity, ICHRAs are not a fad. The regulations allowing them were brought about through true bipartisan efforts, meaning the innovative solution isn’t going anywhere.
Read on for 6 more reasons ICHRAs are here to stay.
1. ICHRAs are cost-effective for employers and employees alike.
With traditional group health insurance, employers are often locked into plans with high premiums, regardless of the actual needs of their employees. An ICHRA, on the other hand, allows employers to give each employee a set amount of funds, which they can then use to purchase the insurance plan that fits their individual health needs and budget. This shift often results in lower overall costs for everyone involved. Plus, claims risks are virtually eliminated with the individual market, meaning there’s no chance of an unexpected renewal rate hike.
2. They offer unparalleled customization.
By implementing an ICHRA, companies and their employees can completely customize their benefits. For employers, ICHRAs allow for different levels of reimbursement based on the employee's job classification, location, and other factors. Employees have their pick of any carrier and plan available in their area.
3. Providing coverage for remote employees is easy with an ICHRA.
Because of their customization, ICHRAs are ideal for businesses with remote or out-of-state employees. The employer can offer employees health benefits regardless of location, as the coverage is based on the individual market and not tied to a specific state or geographic region. This allows employees who are not physically located near the company's headquarters to have access to all desired carriers and facilities near them. Additionally, ICHRAs eliminate the administrative burden and costs associated with managing multiple group health plans for employees in different locations.
4. Compliance is built into an ICHRA.
As mentioned above, ICHRAs fully comply with the Affordable Care Act (ACA) and related regulations. This compliance is ensured through the program's design, which requires that the health coverage offered through an ICHRA meets the same standards for affordability and coverage as plans purchased on the individual market. Additionally, ICHRAs adhere to all ACA regulations regarding pre-existing conditions, annual and lifetime limits, and essential health benefits.
5. Coverage is portable with an ICHRA.
Leveraging the individual market means that employees can take their coverage with them if they leave the company; their plan is no longer tied to their employer. Rather than going on COBRA, the employee can opt to pay for the entire premium themself. This cuts down on administrative time for the company and ensures continuity of care for the worker.
6. An ICHRA can turn a company’s health benefits into a selling point.
As healthcare costs continue to rise, job seekers are looking for companies that offer comprehensive and affordable health benefits. With an ICHRA, employers can demonstrate their commitment to their employees' well-being by providing them with a range of options and allowing them to choose the insurance that best meets their needs.
Having the right administration platform and team is crucial for implementing an ICHRA, as the process can be complex. SureCo's Enrollment Platform streamlines the process, providing ease of use, improved efficiency, centralized data management, and compliance with relevant laws. It also offers valuable reporting and analytics capabilities, enhancing employee engagement and leading to better outcomes for both employers and employees. Interested in learning more? Download our ICHRA Guide or set up a time to talk to one of our benefits specialists today.