Is an ICHRA the Right Option for My Employees?

If you’re looking for an alternative to traditional group health insurance, then you may want to consider an Individual Coverage Health Reimbursement Arrangement (ICHRA), which reimburses employees, tax-free, for individual health insurance premiums and out-of-pocket costs. Essentially, this arrangement reimburses employees for their health insurance rather than purchasing it for them. The arrangement is designed to provide greater cost control for the employer and more options for the employee. With this arrangement, you no longer have the burden of managing a group health insurance plan, which means no more time wasted fussing around with renewals and participation rates, and more time spent focusing on your business and your clients.

When you choose an ICHRA plan for your group, your employees will get their individual health insurance on the marketplace. You, the employer, will then set up a health reimbursement account (HRA) that assists the employee with their individual premiums on a tax-free basis for the employee and the employer has the ability to take the cost of the reimbursements on a business expense basis. The employee may still be eligible for subsidies, but the costs will offset each other (i.e., if the employee is getting $800 and the employer is giving $400, the employee will only receive $400 of the subsidy).

This alternative is ideal for those groups who have never offered a health insurance plan, but who want to offer something for their employees, groups who may have been receiving huge rate increases each year and can no longer afford traditional health insurance, and for groups may have participation issues, but still want to help their employees who need coverage.

It is expected that many companies will move to this type of health insurance plan in the next couple of years, but this option is still new to the market and there are many things to think about before making a decision for your employees. The client relations advisors at ARC Benefit Solutions are equipped with the tools and resources you need to make an informed choice. Contact us today and we will walk you, step-by-step, through the process for finding a group health insurance option that suits your needs, the needs of your employees and their families, and your budget.