In its first two months, key trends are already beginning to emerge about the individual coverage health reimbursement arrangement, a more efficient benefits model that’s gaining traction over traditional employer-sponsored group plans.
“With more than 200 companies signed up with ICHRA so far, we’re starting to paint a picture of the future state of the market,” says Jack Hooper, CEO and founder of Take Command Health.
“We’re encouraged to see large companies in addition to small businesses emerging as true pioneers in this new world of benefits.”
Key findings include:
- Businesses within the following sectors lead in the early adoption of ICHRA: nonprofit/associations (20%), professional organizations like engineers and architects (14%), tech companies (11%) and healthcare providers and services (9%).
- Employers are taking advantage of the uncapped contribution limits and really customizing allowances to fit their budgets and employee needs. Rates for single employees range from $400-$1,200 a month and $500-$1,500 for families on average. Most companies are keeping the reimbursement structure fairly simple, preferring to offer the same rates to all employees or vary by family status. Fewer employers are choosing the option to vary by age.
- Most commonly used classes include salaried vs hourly employees, geographic area, and full-time vs. part-time.
- ICHRA is gaining traction in states that have strong individual markets, like California, Texas, Florida and Oregon. Take Command Health has clients in 36 states as well as Washington D.C. so far.
- 6% of ICHRA enrollees are ALEs, 16% are mid-size companies with 10-49 employees, and the remainder are small businesses with less than 10 employees.
- 66% of ALEs designed their ICHRA to reimburse premiums only and varied the rates by age of employee—a direct correlation to how their previous group plan benefit was structured.
- Small employers prefer to either vary rates by family status or contribute the same to all employees.
- 61% of employers are choosing to reimburse medical expenses and premiums; the rest reimburse for premiums only. Small employers prefer to include medical expenses.
Our research shows that employers signing up for ICHRA are realizing they don't have to stress over huge renewals, worry about participation rate requirements, or manage the variability and unpredictability that comes with being responsible for employees’ health costs.
They can provide a benefit and get back to being business owners.
The feedback from business owners that have chosen not to go the HRA route is also extremely telling. Some learned about ICHRA too late, which isn’t surprising since regulations were only announced last summer. Many misunderstood what ICHRA does, since it’s still so new. Others worried that employees couldn’t front the premium costs or would have trouble finding an affordable and quality health plan on the individual market. Premium tax credits also came into play.
“We’re playing our part to educate business owners, benefits consultants and brokers on this new model of health insurance,” adds Hooper. “It’s exciting to watch this trend begin to shape the market for the better."
About Take Command Health
As a recognized leader in QSEHRA administration and a first-to-market new Individual Coverage HRA administrator, health tech startup Take Command Health is dedicated to accelerating the adoption of HRAs as a means to create a healthcare system driven by informed consumers.