An ICHRA fills the gaps for employers looking for a benefit that is more similar to group health insurance, but has the benefits of the reimbursement model. (Photo: Shutterstock)
One lesson from the pandemic is that employees want more control over the features and cost of their health insurance.
This is the principle behind the Individual Coverage Reimbursement Agreement or ICHRA. Under this model, employees buy their own individual insurance plan and are reimbursed by their employer. The government began work on the standard that ICHRA would create in 2017 and published the final standard in June 2019. Employers quickly accepted the option, with a 219% increase in the number of organizations that signed up for offer an ICHRA in the second half of 2020 compared to the first half of the year, according to new data from PeopleKeep.
Related: ICHRA has the potential to reshape the way employers pay benefits
The ICHRA covers gaps for employers looking for a benefit that is more similar to group health insurance but has the benefits of the reimbursement model. PeopleKeep, which provides HRA management software, points to several benefits for employers:
Fulfillment of the employer’s mandate. Employers can use the ICHRA to fulfill the ACA’s business mandate.
Employer cost control. Employers define a fixed budget, or a bonus, that works for the business without worrying about carrier-driven annual rate increases. There is no limit on bonuses, so employers can offer anything they want.
There are no minimum contribution requirements. Employers can choose the amount of the bonus that works within their budget without being told that they must contribute a minimum percentage of each employee’s premium.
Classes of employees. Employers can offer a health benefit to a subset of their employees and offer employees different amounts of compensation based on eleven different employment criteria. There are no participation requirements. Employers should not pressure employees to participate in the benefit just because they meet the plan’s participation requirements.
Employee choice and portability. Employees access many more plan options by buying from the individual market and buying their own plans, which makes them fully portable regardless of their employment status.
“There are significant benefits for both parties,” PeopleKeep concluded in a report. “Employees have the power to buy their own plans that they can take away when they leave their employer, while employers gain control over their costs, streamline the budgeting process by making their costs more predictable and eliminating administrative hassle to deal with the group health insurance plans.
“Employers considering ICHRA should focus on creating a stellar experience for employees from the beginning, from notifying and educating them about their new benefit, to helping them evaluate and buy employees. your insurance plans, to the point of providing ongoing assistance for the reimbursement of expenses “
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