Studies show that premiums for group health insurance plans have increased by nearly 60% since 2000, and experts predict these employer-sponsored medical plan costs to increase by another 5.6% in 2023. As these costs continue to rise year after year, many employers are now looking for alternatives to these traditional group health insurance plans.
Benefits of ICHRA Administrators
Fortunately, starting in January 2020, ICHRA options became available to businesses of all sizes. These plans are becoming increasingly popular. An ICHRA plan allows businesses to reimburse employees for certain medical expenses, including health plan premiums. Working with professional ICHRA administrators makes managing an ICHRA plan easy and efficient.
Continue reading to learn more about ICHRA plans and the benefits of working with ICHRA administration companies.
What Is ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a company-funded healthcare benefit plan. Rather than paying employees’ health plan premiums directly, as with a traditional group insurance plan, an ICHRA plan reimburses employees for various healthcare costs, including health plan and Medicare premiums. These ICHRA reimbursements are completely tax-free.
ICHRA plans come with fewer restrictions than a standard HRA plan. For example, businesses of all sizes are eligible to participate, and there are no reimbursement limits. Additionally, employers can reimburse employees for health insurance premiums, medical expenses, or both, depending on the specifics of their plan.
ICHRA vs. Group Plans
ICHRA benefit plans differ vastly from traditional group health insurance plans. With a group plan, the employer offers one or more company-selected insurance products. Employees can choose which of these options they want. With an ICHRA plan, the employers provide employees with a set amount of money that they can use throughout the year to pay various medical costs, including health care services and health plan premiums. Employees can purchase their own plans through the insurance market.
ICHRA Pros and Cons
When determining whether implementing an ICHRA plan is right for your company or not, it’s important to examine the ICHRA pros and cons.
Pros of an ICHRA Plan
- Availability: Available to businesses of all sizes.
- Flexibility: Employers have the freedom to design their own plan with minimum eligibility requirements and no reimbursement limits.
- No Group Health Plan: Employers don’t have to offer group health insurance, which eliminates the hassle of insurance renewals, rising premiums, and participation rates.
- Affordability: Simple pricing allows employers to better budget its healthcare benefit costs.
- Improved Recruitment and Retention: Ability to attract and retain talent by offering flexible healthcare benefits.
- Employee Choice:* Employees have more healthcare coverage options.
Cons of an ICHRA Plan
- Limitations: Reimbursement for spouse group health plans are not allowed.
- Exclusions: Employers participating in healthcare cost-sharing plans are not eligible for ICHRA.
- HIPAA Compliance: If ICHRA plans are administered in-house, employers must develop strict confidentiality guidelines to comply with HIPAA regulations.
How to Administer an ICHRA Plan
ICHRA administration can be complex and requires an administrator to set up and manage the plan. The first step to setting up an ICHRA plan is to set employee classifications. These classifications determine plan eligibility and must adhere to IRS regulations. Next, you need to set reimbursement limits and determine what medical expenses, such as premiums and healthcare costs, qualify for reimbursement under your plan.
The next step is to enroll your employees in the plan and make sure they select a qualified individual insurance plan. When you work with Take Command, our insurance specialists can help your employees with the enrollment and selection process. An ICHRA administrator also handles new enrollments and terminations throughout the year.
Once the ICHRA plan is in place, the employer must develop a system for processing reimbursements. Using ICHRA administration software can help to streamline this process and ensure accuracy and compliance.
Benefits of Working With an ICHRA Administrator
At first glance, ICHRA administration may seem rather simple and straightforward, but it does come with a variety of ICHRA rules, regulations, and compliance requirements. Since ICHRA is a fairly new benefit plan, these regulations change frequently, which can make administration more difficult. Many employers choose to forgo the complexities of administering its ICHRA plan and outsource these services to ICHRA providers.
As one of the best ICHRA administrators, we can handle the entire ICHRA process, including sending IRS-required communications to employees, onboarding employees, providing educational materials, completing legal documents, handling year-end reporting, and more. Our Take Command ICHRA administration services also offer a variety of great benefits, such as:
Our customized admin portal gives employees easy access to all relevant data, including plan details, documents, reimbursements, and payment information.
We stay up to date on the latest ICHRA regulations to ensure IRS and reporting compliance.
Our administrators handle the reimbursement process to ensure HIPAA compliance.
Our easy-to-use HRA platform makes it simple for employees to enroll, request reimbursements, and track balances, which can improve employee satisfaction.
We provide regular reimbursement reports to keep employers up to date.
Reach out to learn more about our Take Command ICHRA administration services or try our free ICHRA demo today.
I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!