What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows businesses of all sizes to offer employees a monthly allowance of tax-free money. This stipend then reduces the cost for employees to purchase their own health coverage that can fit their unique needs (through a marketplace) while controlling costs and addressing ACA compliance.
In short, it allows businesses to take control of their healthcare budgets while giving employees the ability to choose.
Challenges Facing Employers Today:
- Health insurance costs are skyrocketing and out-of-control
- Recruiting and retention challenges are rising
- “One-size-fits-all” group insurance plans aren’t meeting employee needs
- ACA non-compliance is leaving employers exposed to significant fines
- ACA mandates for large employers are eroding employee compensation
Benefits of ICHRA for Employers
- Controlled costs and risk
- Flexibility – levels of benefit per employee class
- Less administrative burden
- No participation concerns
- Attraction/Retention
- ACA Compliance & Tax Efficiency
Benefits of ICHRA for Employees
Choice: Employees can choose any ACA-compliant plan on the market (about 70% of companies only offer one plan).
Portability:
The individual health insurance plans are portable, meaning if an employee loses their job, they don’t lose their health insurance.
Flexibility: ICHRA works great for employees that are hard to keep on a group plan, like part-time or remote workers.
How does ICHRA work?
As the name implies, ICHRA is based on reimbursing employees for insurance rather than buying a group plan for them.
At a basic level, the way ICHRA works is very simple:
- Employers design their plan, including defining which employees are eligible and establishing reimbursement limits
- Employees purchase the individual plans they want
- Employees submit claims for reimbursement
- Employers reimburse employees for valid claims
Setting up and administering an ICHRA has certain requirements- like legal plan documents, process to substantiate employee claims, reimbursement process, record-keeping and tax reporting to name a few.
But don’t sweat it, we’ve got you covered. We’re here to help with everything from plan design, to assisting employees shop for their health coverage. Are you an employer that is looking for alternatives to a group health plan? Contact us today to set up a no obligation appointment.
