Traditional group health plans come with costs that are detrimental to employers and a lack of choice that is detrimental to employees. The Individual Coverage HRA model solves both of these problems, providing employers with greater cost control and employees with a greater range of options. It also eliminates many other employer concerns, such as participation rates, risk management, networks, and more. With an ICHRA, all you have to do is decide which employees qualify and how much they are allowed each month, then set them loose to choose the plan that is best for them – a ‘win’ for all involved!
- Why should your organization take up the ICHRA model?
You control the budget. Many employers using traditional group health plans face significant cost increases year after year. With an ICHRA, you get to decide exactly how much you will pay, and that’s that. Better yet, if your employees decide not to purchase insurance or are able to purchase it for less than their monthly “allowance”, you get to keep the money that is left over.
Plenty of room for customization. ICHRAs are highly flexible and can be customized to suit your team’s needs. For example, you can decide to offer different rates of reimbursement for a single employee versus an employee who has a family.
No more worry over managing health risk. With an ICHRA, your costs are set from the beginning, with no need to worry over how much your employees are spending on healthcare and how best to mitigate these costs.
No participation goals to meet. ICHRAs have no requirements when it comes to employee participation. There are no minimum thresholds that can make or break the plan, and thus no need to stress about how you will incentivize it.
No networks to evaluate. With an ICHRA, your employees will be purchasing their own plans with their own networks – no need to worry about whether the network for your group plan will suit all of their needs.
More choice for employees. Traditional group health plans are a one-size-fits-all type of solution. With an ICHRA, employees are free to choose the plan that offers the provider, formulary, or other factor that best suits their needs.
More perks for employees. Many individual insurance plans provide a greater range of perks, tools, and programs for their participants than a group plan would, including access to special apps and concierge services as well as a more personalized experience overall.
Perfectly portable plans. Under an ICHRA, each employee buys his or her own individual insurance plan. Because that plan is purely theirs, it can easily be taken with them if they leave your organization.
Ease of implementation. Shifting your employee health benefits from a traditional model to an ICHRA can be done with little hassle, as you can choose to offer the ICHRA primarily to new employees while keeping existing employees on the old group plan, smoothly transitioning your workforce over time without disrupting the systems already in place.
- Downsides to ICHRAs
Many organizations stand to benefit from adopting an ICHRA, but it is not a solution that will suit everyone. While ICRHAs can save you money in some places, one must also consider that individual health plans are on average 10-20% more expensive than group health plans. The networks included under most individual plans are also smaller than those for group plans, which will limit the range of providers that your employees will be able to access.
- The best model for your situation
When evaluating whether an ICHRA or a traditional group health plan is best for your organization, consider which option would be best for your employees not just as a whole, but also for different segments of the employee population, such as full-time employees versus part-time employees. One of the great things about ICHRAs is that even if some employees would do better with a traditional plan and others would do better with an ICHRA, this is perfectly doable! So long as you follow certain guidelines about how splits are made, you can divide your employee population into different “classes” and choose to offer an ICHRA to one class and a traditional health plan to another. Please see our article on ICHRA classes to learn more about how they work and how they can benefit your organization.