Companies best suited for ICHRAs save an average of more than 20% on their yearly health care premiums and their employee satisfaction scores surge, thanks to the additional plan options.
Skyrocketing renewal rates are leading consultants and their clients to look beyond traditional group health insurance in favor of more creative solutions. One increasingly popular option is the Individual Coverage Health Reimbursement Arrangement (ICHRA).
Under an ICHRA, employers can contribute tax-free funds to the individual, Affordable Care Act- (ACA) compliant health plan of each employee's choice. Companies best suited for ICHRAs save an average of more than 20% on their yearly health care premiums. Further, their employee satisfaction scores surge thanks to the additional plan options.
However, the innovative coverage alternative isn't right for every organization. Here are four ways to help identify which of your clients could benefit from an ICHRA:
1) Ongoing high claims. Some of the biggest ICHRA cost savings can be found for clients with ongoing high claims. Think about it this way: A single employee with a chronic health condition can inflate premiums for an entire company population under the group model.
With an ICHRA, that employee's claims are dispersed across the much larger individual carrier market state pool. The same can also be said for companies in high-risk industries, such as construction and manufacturing, where workers cost more to insure.
2) Low participation or high turnover. Unlike traditional group plans, which require 75% participation, ICHRAs do not mandate a set rate of participation. This makes them compelling for clients like staffing agencies, retailers and hospitality companies that struggle with hitting the threshold.
Companies in these industries also face high turnover rates or employ seasonal workers, which can increase the administrative burden for HR teams. Using an ICHRA and partnering with the right administrator can lessen these businesses' workload. An ICHRA offers built-in ACA compliance and virtually eliminates the need for COBRA because employees own their plans and can keep them if they leave.
3) Geographically distributed workforces. It can be difficult for companies with employees in multiple locations to find carriers with in-network choices for physicians and facilities. With an ICHRA, employees can choose plans that cater to their unique needs and that tap into regional health care providers. This is particularly important as more companies adapt to remote and hybrid work environments.
4) Labor shortages. The competition for workers is fierce, and an ICHRA can give your clients a competitive advantage when it comes to winning and retaining top talent. ICHRAs allow employees to choose health plans that best align with their needs and preferences, making them an attractive option for job seekers. Embracing an ICHRA and minimizing administrative complexities allows your client to redirect resources toward other innovation-driven initiatives that their employees value.
As the challenges of traditional group health plans persist, an alternative like an ICHRA is a valuable tool. By offering ICHRAs to companies that meet any one of the criteria above, consultants can provide a more flexible and cost-effective solution to foster a healthier and more sustainable workforce.
Tom Mafale is chief revenue officer for SureCo, a healthcare and insurance technology company that specializes in ICHRA administration.