Humans are creatures of habit. We tend to stick to our routines, even when they no longer work.
At first, benefits advisors were skeptical about ICHRAs (Individual Coverage Health Reimbursement Arrangements). But with premiums rising and clients feeling uneasy, many now realize that offering more than traditional group health plans might be the key to unlocking better health benefits for their clients. 50% of brokers now feel compelled or required to present ICHRAs as a solution for their clients.
Employers are also thinking about ICHRAs. The number of companies reported to have adopted an ICHRA grew 64% between 2022 and 2023. Impressive, right? Let's discuss the changing sentiment behind ICHRAs and why top brokerages nationwide are embracing this shift to provide even greater value to their clients.
What Exactly Are ICHRAs?
First, let's quickly review what ICHRAs are all about:
- It's an employer-provided health benefit model: ICHRAs are provided by employers and allow employees to select health insurance coverage from all plans available in their area.
- It's funded by pre-tax dollars: Employees receive tax-free reimbursements from their employer for a portion of their premiums.
- It's incredibly cost-efficient: ICHRAs often save money compared to traditional group benefits by offering predictable costs for employers and more affordable plan options for employees.
Why Benefits Advisors Are Embracing ICHRAs Now
Now, let's dive into the intriguing part. When ICHRAs first hit the market in 2020, benefits advisors were cautious and unsure of their role. Now, according to a recent SureCo survey, about 63% of benefits advisors predict ICHRAs will claim over 50% of the market in the next decade.
So, what prompted brokerages nationwide to recognize the potential of ICHRAs now? There are two main reasons. With ICHRAs, benefits advisors can:
- Offer dramatic cost savings for clients and their employees
- Help clients navigate changes in their organizations
Offer Dramatic Cost Savings for Clients and Their Employees
With traditional group health insurance premiums soaring, businesses are seeking alternatives to alleviate the financial strain. Last year, benefits advisors saved their clients an average of 16% by transitioning them to an ICHRA.
ICHRA takes the risk out of group insurance. Its flexibility in the reimbursement model empowers employers to offer insurance that suits them without worrying about being locked into a one-size-fits-all plan that becomes more expensive each year.
Help Clients Navigate the Changes in the Workplace
There has been a massive shift in employee types across industries in recent years. For instance, employers now manage geographically dispersed employees, sometimes with employees working in states not covered by the company's insurance carrier. Plus, younger members of the workforce want more options and a say in picking their benefits.
An ICHRA is an ideal solution for these types of company dynamics. ICHRAs empower benefits advisors to customize their offer in a way that traditional group plans couldn't, boosting enrollment rates and expanding the pool of employees they can assist.
As Dan Grelecki, Midwest Employee Benefits Leader at EPIC Insurance Brokers & Consultants, says in ICHRA: Not Your Parents' Employee Benefits… Better, "Thanks to ICHRAs, employee benefits' role in retention has recently taken a giant leap forward by helping employers be more strategic about funding the cost of employee benefits while giving employees more plan choices and flexibility than they've had in a long time."
Understanding the Impact
ICHRAs are creating a stir in brokerages because they're not only cutting costs and meeting workforce needs— they’re also driving client retention.
Merrell Botello, a benefits consultant with Burnham Benefits, confirms in a recent interview that their data shows average renewal increases of 15.2%. And those rates aren't going down. "People need something different," Botello explains. "We've been doing group benefits the same way for decades, and we just need to really try something new. We don't have a choice not to consider ICHRAs anymore."
Bill Stuart, ex-president of the National Association of Benefits and Insurance Professionals, puts it succinctly in his article ICHRAs, Disintermediation, and the Opportunity for Brokers: "To the unprepared benefits advisor, ICHRAs are something to fear. To the prepared broker, they're an opportunity to retain and attract clients."
And if you're wondering where to start, John Wiesler at BenefitMall offers some advice: "Start by asking clients if they have considered offering benefits to groups they haven't traditionally covered […]. See how they are feeling about their projected costs […] Introducing ICHRAs as part of educational efforts can help clients create the right mix of benefit offerings for employees and their business."
Embracing the Shift with SureCo
ICHRAs are here to stay. Advisors can utilize their deep understanding of clients’ specific needs and offer cost-saving ICHRAs that help them adapt and grow.
SureCo collaborates closely with benefits consultants, empowering them to navigate any complexities and maximize the benefits of ICHRAs for their clients. Learn more about how SureCo works with benefits consultants.
