As Individual Coverage Health Reimbursement Arrangements (ICHRAs) have been growing in popularity, there are certain benefits that have been standing out. While ICHRAs are relatively new, these benefits are making them attractive for employees, employers, and brokers. Let’s look at some of the most common benefits.
Employee Choice
In traditional group insurance, employees generally must choose from a couple of plan options. With an ICHRA, employees now get to choose from numerous plan options. The employee can find the plan that best fits their financial and medical situation. ICHRAs have a wide range of plans that differ in price, networks, deductibles, out-of-pocket maximums, and choices of copays and coinsurance. Every employee is in a different situation, and ICHRAs allow the employee to choose a plan that best fits their needs.
Additionally, every employee will have plan options based on the state they live in. A remote employee residing in a different state will be able to utilize the HMO and EPO networks instead of needing to use a PPO for their doctors to be covered. Having the option to utilize an HMO or EPO network will give the employee a more budget-friendly option.
Employer Flexibility and Stability
As an employer, are you consistently getting high-rate increases? Budgets in an ICHRA are determined by a set amount of money for each employee, depending on the age of the employee. This allows flexibility for the employer to adjust each year to achieve the desired budget. Classifying employees is another way to keep the budget in check. Classification is when the employer separates employees into different groups based on certain criteria. Common classing options include geographic location, hourly/salary, and part-time/full-time. The employer can either offer a different amount of money to the different classes or they can offer the ICHRA to certain classes while keeping the rest of the population on the group plan. Overall, ICHRAs have a lot of flexibility in setting the budget.
Additionally, the individual market is community-rated and not based on the claims of your group. This leads to level increases year over year and a more stable long-term solution. No longer will you have to wait anxiously for your renewal, as ICHRA rate changes have generally been less volatile. This will give the employer the time, money, and attention to focus on other benefits.
Strategic broker relationship
It’s obvious that ICHRAs are much different than the traditional group market. While considering changing to an ICHRA can be daunting to many, the broker can show their strategic expertise in determining if the ICHRA is a good fit for the client. Additionally, the broker will have a more high-level role in helping the employer feel comfortable with the change while giving valuable input and strategies. With Bavvy, all of this can be done while still receiving compensation, just like in the traditional group market.
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