Learn the advantages of Individual Coverage HRA’s

Last updated on July 16th, 2021 at 06:51 pm

As companies re-shift their focus from survival to growth following the pandemic, many employers are placing renewed emphasis on employee health and wellbeing — and rethinking their health benefits packages in the process.

When you’re a business owner, offering employer-provided health coverage is a great way to attract and retain top talent, and improve job satisfaction in the workplace. But over the years, rising healthcare costs have become a source of significant stress for employers and employees, alike.

Since 2010, average family premiums have increased more than 55 percent. In the past five years alone, the Kaiser Family Foundation found that annual family premiums for employer-sponsored health insurance rose 22 percent to an average of $21,342 in 2020, with employers contributing more than two-thirds toward the cost of coverage.

The surge of healthcare costs has forced many smaller companies to reduce benefits and increase employee costs, or worse, opt out of offering health benefits altogether.

Each year, we hear from customers who are frustrated by the annual health insurance renewal process and unexpected increases. Whether it’s finding an insurance company that provides affordable group health plans that work for everyone or finding a plan that fits within the company’s budget, the complexity of selecting coverage that satisfies both parties presents a constant challenge.

More than 80 percent of employers that provide coverage only offer one type of health plan to their employees, leaving many workers and their families behind, according to the Employee Benefits Security Administration.

When it comes to growing your business, investing in employee health and wellbeing should be a top priority. A healthy workforce positively impacts work productivity and performance, boosting the company’s bottom line.

So, it’s surprising that many employers are still unaware of an ICHRA, which is a simpler way to create quality healthcare benefits for employees and provides employers with complete control over their health insurance budgets.

A new health benefits model

ICHRA, an acronym for “Individual Coverage Health Reimbursement Agreement,” is a new kind of Health Reimbursement Arrangement (HRA). In 2019, the federal government created this new type of HRA which allowed employers to reimburse employees a fixed amount of money each month for health insurance premium and healthcare related out-of-pocket expenses if they used at least some of the money to purchase a qualified health insurance plan.

Today, through an ICHRA, employers can take advantage of this alternative option of providing quality health insurance benefits to employees with the same tax benefits of a traditional group plan. An ICHRA removes the hassles of employers selecting an insurance company or plan and allows employees to choose an insurance company and plan that fits their individual needs, household budget, and lifestyle.

Because employees are free to choose their own insurance company and plan, employers aren’t stuck between reducing benefits or increasing employee costs to keep budgets in line.

It’s also one of the reasons why an ICHRA is a great option for smaller companies, especially if they haven’t offered health insurance before.  For larger employers subject to the Affordable Care Act, ICHRA’s keep them in compliance and out of the “penalty box.”

Since an ICHRA first became available to employers in January 2020, there has been a prevailing misperception that these individual health premiums are higher than group premiums.

That simply isn’t the case.

By providing employees with a greater range of options and allowing more people to shop for health plans in the individual marketplace, health insurance companies are more likely to innovate products and price them competitively.

In Milwaukee County alone, there are at least 60 different health plans from five well-known insurance providers from which to choose.

According to the U.S. Treasury Department, more than 800,000 employers are expected to offer an ICHRA to cover more than 11 million employees and their families in the next five years, including by expanding health access to nearly one million workers who were previously uninsured.

Navigating the complex health benefits landscape can be challenging for any size businesses.

With an ICHRA, businesses can remove the costs and burden of selecting a single health plan for their workforce and provide employees with a choice they can afford, allowing employers to focus on customers and building their business.

At zizzl Health, we help companies explore their options for high-quality, hassle-free health insurance. If you’re interested in how an ICHRA can work for your business, contact zizzl Health for a free ICHRA Cost and Savings Analysis.

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.