ICHRA is changing the face of employer-sponsored health benefits

When most business leaders are introduced to the concept of ICHRA, a relatively new model of employer-sponsored health benefits that provides long term budget control and the potential of significant savings over traditional group benefits, their first reaction is somewhere along the lines of “seems too good to be true.”

That was the sentiment expressed by Jon Gaines, VP of Finance at WWBIC, a statewide economic development corporation based in Milwaukee. The organization had been enrolled in a group health plan nearly since its inception but began weighing new options during the December 2020 renewal period to combat surging annual premiums — which were in excess of 35 percent. WWBIC couldn’t keep shouldering the financial burden with high cost-sharing.

“We’re a small business growing fast, with limited employees,” explained Gaines. “A big part of it was really the dollars involved — the [cost] was just getting to be very prohibitive in regard to us being able to support a health plan at WWBIC.”

When they turned to zizzl to find a health benefits solution, WWBIC leaders were surprised to learn about ICHRA, a new option for employer-financed health coverage.

“I kept thinking ‘How come we haven’t heard of this?” said Patti Lohmann, who heads up HR for the company. “The cost savings was a huge, huge positive but it also gave our staff a lot of options. Our employees were pleasantly surprised when they saw that they may not have to pay anything toward this benefit.”

ICHRA, an acronym for Individual Coverage Health Reimbursement Arrangement, allows employers to reimburse premiums for individual market coverage selected by employees, tax-free.

It enables businesses to set the controls on their budget, and empowers employees to select their own healthcare coverage, rather than having their employer choose a group plan on their behalf or fall under blanket insurance.

More than 74 percent of firms offering health insurance only provide employees with one type of health plan, according to the HRA Council.

For WWBIC, part of ICHRA’s appeal rested in giving employees choice, but with a reimbursement process that was as easy to navigate as a group plan.

“The biggest thing was we could provide more and better options,” Gaines said. “That sigh of relief from our team and not, ‘Oh gosh, here’s another increase, a cost-share we have to do.’ We actually brought the cost down for our employees. For WWBIC, too. It’s been a complete shift to where we actually have savings … and can use those dollars to put them to use in other areas of our business.”

Since ICHRA was first enacted by the federal government in 2019 to help reverse the decline in the percentage of employers at smaller companies offering health insurance, the benefits model has largely flown under the radar. But the voluntary option is quickly catching on for its breadth of quality coverage and cost-savings.

At Milwaukee Cylinder, signing on to an ICHRA through zizzl meant the manufacturer could “get out of the benefits” business and put the reins back into the hands of their employees — with the guidance of their zizzl broker team.

Earlier this year, the company’s VP of Finance, Justin Dahm, was staring down renewal costs from “big plans that were out of this world.”

When he learned about ICHRA from zizzl, he was surprised by the number of quality plans available from major health insurers under the program and how much support would be provided to employees throughout the transition, many of whom were brand new to learning about and selecting their own health coverage.

“We didn’t really have the knowledge or ability to give all of our employees the information they needed to select the right plans,” said Dahm. “There was a lot of hand holding on our end, too. zizzl really walked us through it and put it all in layman’s terms for those of us who didn’t know the benefits side.” Dahm added employees also benefited by zizzl’s on-site presentations about ICHRA during the enrollment period, the broker’s online health plans assessment to help employees narrow their coverage options, and concierge service to help them select the right plan.

When it was all said and done, the company and its employees were thrilled with the results of an ICHRA benefits plan.

“We did some business analysis and it was just the right route for us to take,” Dahm explained. “We looked at different insurance plan options that were out there. Ultimately, we were looking for a better solution. ICHRA had great options for Wisconsin-based employees. We decided to jump in.”

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Ray has spent the last 30 years leading employee benefit and HR technology and services firms. His most satisfying responsibility at zizzl is leading a service experience that sparks client innovation and growth. When the tedious work of HR and benefits disappears, time and energy reappear for their people. It’s hard to imagine anything more rewarding than seeing that result in a client growing and creating good paying, family friendly, life enriching jobs.

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