Maryland and its major metros like Baltimore are positioned to win with a new benefits model called the individual coverage HRA (ICHRA). The reason Maryland ICHRAs are set up for success is largely in part due to a very strong individual health insurance market with affordable premiums and lots of choices. Here's how Maryland business owners are using ICHRAs to reimburse their employees for health insurance tax-free and why the state has a leg up.
As a quick refresher, the individual coverage HRA, a new type of HRA that was new January 2020, allows employers of all sizes to reimburse for individual health plans that their employees choose based on their needs. Reimbursements for premiums and medical expenses are tax-free for everyone and give employers more flexibility and control over their benefits plans and employees more choice and personalization.
ICHRA represents a fundamentally new way of doing benefits.
Why Maryland ICHRAs are set up for success
Individual coverage HRAs are most successful in locations with strong individual health insurance markets. Factors like individual premium pricing vs group pricing, carrier competition, the number of plans available and stability come into play here.
In Maryland, the individual health insurance marketing is booming, with 2021 enrollments at record highs and 47 plans to choose from last year. This year has brought an additional carrier with United Healthcare re-entering the market, giving employees three different carrier choices as they shop for plans.
With the state's reinsurance program contributing to lower premiums and a stabilized market, premiums decreased by an average of 13% in 2019, by another 10% in 2020, and decreased by nearly 12% in 2021. The market continues to be very stable with only has a 3.5% average rate increase proposed for 2022 individual and family health plans.
How Maryland business owners are using their ICHRA
Statewide on average, Maryland business owners reimburse their employees $428.02 each month to pay for individual health insurance (pricing based on a single individual plan). This is well above the lowest cost bronze plan ($250.43 / single) and the lowest cost silver plan ($332.02 / single). Average reimbursements for mid-market businesses (50-300) reimbursed more, $547.25 on average.
Business owners with a group plan, in contrast, typically will cover around 70% of the premium costs, and the rest is taken out of their employees' paychecks. Business owners offering an ICHRA cover 171% of the cost of a bronze plan, covering considerably more than those with a group plan.
While employers with group plans usually cover 70% of the costs, business owners offering ICHRAs in Maryland are covering 171% of those costs.
Individual health insurance carriers available in Maryland
Maryland has three carriers to choose from:
- CareFirst BlueCross BlueShield
- Kaiser Permanente
- United Healthcare (new in 2021)
Based on our clients in Maryland, their employees overwhelmingly chose plans from CareFirst BlueCross BlueShield.
What types of companies are using ICHRA?
Types of companies using ICHRA run the gamut! Associations, churches and non profits together take the lead spot, but blue collar service industry, tech, healthcare services, household workers, and those in the hospitality industry trend high as well.
Want to learn more about the Maryland ICHRA opportunity?
We are here for all the questions. Chat with us in the bottom right hand corner of your screen and our team of experts will fill you in on the Maryland ICHRA trend, how its changing the way we talk about health benefits in the state (and nationwide!), and how it could benefit your business or client.
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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!