Before Individual Coverage Health Reimbursement Arrangement (ICHRA) plans were created through federal regulation earlier this year, businesses large and small across the country grappled with the lack of practical health care coverage options they could offer employees. Luckily, thanks to the existence of the Affordable Care Act (ACA), ICHRA plans are now a very viable and optimal choice for businesses of any size. And while the ACA’s future continues to undergo scrutiny on a federal level as we saw during the Nov. 10 Supreme Court hearing, all signs indicate the ACA will survive, although some changes may occur. And I am happy to say that consumers do not need to worry about their coverage for the foreseeable future.
As CEO of Friday Health Plans, a new health insurance carrier that has joined Nevada Health Link, the online marketplace where Nevadans can purchase affordable, comprehensive health plans, I am here to demystify the often intimidating process of health insurance coverage. And I encourage employers to consider exploring how an ICHRA can benefit their businesses and their employees.
WHAT EXACTLY IS AN ICHRA?
An ICHRA is an alternative to the traditional way of providing health insurance to employees, allowing business owners to allocate funds towards employee accounts. Employees can then shop on the individual marketplace to buy a personal and portable health plan that works best for them, using the funds provided by their employer to offset premium costs.
HOW DOES IT WORK?
Each business decides on the amount they would like to contribute to employees’ monthly health insurance premiums. There are no minimum or maximum contribution requirements and allowances can vary based several employee classes, including full-time, part-time, seasonal, hourly and salaried employees. Employees can then use the funds toward the purchase of health coverage that fits their personal needs.
WHAT ARE THE BENEFITS OF ICHRA?
• Employees go through the process of shopping and purchasing their health insurance on their own, eliminating the need for a company administrator or human resources manager to facilitate the transaction. Employees are now empowered to purchase a plan that is tailored to them, their families and their budgets.
• Insurance costs are tax-deductible for the employee and the employer.
• The “one-size-fits-all” employee health insurance mentality can now be a thing of the past. Employers are no longer bound by group insurance restrictions, and likewise, employees’ plan options and customizations are greatly expanded. Furthermore, employees can take the reigns on choosing a plan that fits and meets their needs, including preferred doctors and prescription coverage.
WHO CAN OFFER ICHRA?
Businesses of any size can offer an ICHRA, including nonprofits, churches, local governments, etc. as well as private businesses.
There are no minimum employee participation requirements for an ICHRA.
WHY IS IT IMPORTANT TO EXPLORE AN ICHRA, TODAY?
Less than a year since the ICHRA legislation passed into law in January 2020, research already shows a significant increase in interest and demand for ICHRA plans, especially as COVID-19 continues to impact businesses and households worldwide. As we are enduring yet another brutal wave of this global pandemic, it should serve as a somber reminder to the uninsured of the critical importance of having health insurance. There are so many things we are having to overcome these days, so the stress and anxiety of potential bankruptcy due to illness and injury should not be one of them.
WHAT IS THE FUTURE OF ICHRA?
The Department of Health and Human Services projects that in the next several years, roughly 800,000 employers will offer ICHRA plans to pay for insurance for more than 11 million employees. If market conditions continue to trend in the direction they are going, those figures could be much higher.
HOW AND WHEN CAN BUSINESSES PURCHASE ICHRA FOR THEIR EMPLOYEES?
Businesses can purchase an ICHRA any time during the year, but the easiest is during the annual open enrollment period, which is happening now through Jan. 15, 2021 for 2021 coverage. Employees who want coverage effective Jan. 1 must enroll and purchase a plan by Dec. 31. Anyone who enrolls between Jan. 1 and 15 will have coverage effective Feb. 1.