By OneBridge Benefits
More employers are considering the ICHRA (pronounced “ick-ruh”) as an alternative to their traditional group health plan offering. However, making the final decision to switch from the traditional model to a more modern solution can be difficult. Misinformation can lead to unnecessary and potentially costly second-guessing.
To help employers and employees make more informed decisions, this article busts some of the common ICHRA myths perpetuated by the critics of the model.
Myth No. 1: The ICHRA is only for small employers.
Busted. It’s true that an ICHRA is a well-received change for small employers who are not subject to the employer mandate under the Affordable Care Act (ACA), and either cannot afford to provide a traditional group health plan or are limited to plans available in the small group marketplace.
However, ICHRAs are not just a fit for smaller employers. More and more large employers are discovering the benefits of the built-in cost control and employee choice of an ICHRA. In fact, a large Western New York manufacturer avoided double-digit rate increases in its first year of switching to the ICHRA model. One of their leaders was quoted as saying, “We were facing double-digit group rate increases. We were able to mitigate that by at least half. I don’t want to be in the business of dictating employee health choices. Some of the younger employees were able to make choices and save themselves money, or actually cash in on the extra money that was made available to them. That scenario wouldn’t have played out with traditional group plans, as they wouldn’t have had the option.”
Myth No. 2: Employees are confused when faced with too many health plan options.
Busted. Economic research shows that employees value health coverage choice. A 2013 study in the American Economic Journal estimated that the median value employees place on having additional insurance options equaled approximately 13% of premiums, meaning, they are willing to pay more to have additional options. Moreover, employee choice under an ICHRA enables employees to purchase lower-cost plans and keep the savings. Excess dollars remaining after choosing a lower-cost plan can be used for current out-of-pocket health care expenses (that were previously covered with after-tax dollars) or saved for expenses employees will incur in the future.
With the ICHRA, employees have the freedom to determine how to spend those dollars. Imagine if your employer gave each employee a choice between a two-door Lexus RC 350 that costs $45,000 or $45,000 to spend on the car of their choice. Some employees would take the 350, but others would buy a Ford Focus and keep the change. Some may buy a $45,000 Chrysler minivan, while a few would pay more out-of-pocket funds to buy a Lexus LX SUV. Now imagine if employees had that much control over the purchase of health insurance, given that their needs vary depending on their current and future financial, family and health status.
Case in point: Buffalo-based ICHRA provider OneBridge Benefits found that in the average subset of 100 employees, over 30 different plans were selected by those employees. Through the traditional group health model, the majority of employers with 100-500 employees are only able to offer one or two different plan options to their employees.
Myth No. 3: Plans on the individual market tend to be of lesser quality, with narrower doctor networks and higher deductibles.
Busted. The Affordable Care Act added strong protections specific to the individual marketplace and the plans made available through it. For example, individuals cannot be denied plans based on pre-existing conditions, and insurance carriers cannot cap their claim costs.
Since these regulations were put in place, New York State legislators went even further by implementing additional cost-controlled guidelines, which have resulted in an overall decrease in pricing volatility, without jeopardizing the quality of coverage individuals receive.
With some of our community’s largest insurance providers, such as Independent Health, publicly committing to making more high-quality, appropriately priced plan options available on the individual marketplace, the already strong coverages will surely evolve to be stronger.
The outcome? Western New York alone has more than 60 plans available on the individual market — providing covered employees with the ability to choose from multiple insurance carriers with various plan choices and features, along with a wide range in premium costs.
Myth No. 4: Individual plans are overpriced for employees.
Busted. For many WNY organizations, the cost of comparable individual coverage is already lower than the cost of their group health plan. Local ICHRA provider OneBridge Benefits has seen cost savings in the majority of its 30-plus analyses when comparing group plans against comparable individual plans within WNY this past year.
With five dozen plans already available in our region’s individual market, this positive trend will continue as some of WNY’s largest providers, such as Independent Health, Highmark and Univera, widen and strengthen their presence and compete for consumers’ business.
If your organization’s group health insurance rates continue to increase, switching to the individual market is likely a path to increased cost savings for the organization and greater purchasing power for your employees. A win-win.
Myth No. 5: Employees will hate it.
Busted. With traditional group benefits, employees attend one meeting per year where they either select the only option or pick from a handful of plans and call it a day. Do they actually leave that meeting feeling like they received guidance and tailor-fit coverage required for their specific situation, and do they know where to turn when questions arise?
With YourWay ICHRA, every part of the process is guided and specific to each individual’s needs. OneBridge Benefits Director of Agency Account Management Laryssa Domagula contextualized why the OneBridge team has received an average post-enrollment satisfaction rating of nine out of 10 (as opposed to the average traditional group health coverage rating of 3.5 out of 10) from those who have adopted the ICHRA.
“We start every enrollment process with an easy-to-digest onboarding meeting,” Domagula said. “From there, we speak with every participant one-on-one, in-person or over the phone, to help them find and select the most appropriate coverage for them and their families. After enrollment, our team of care specialists is available to answer any and all questions related to their plan.”
Want to know more ICHRA truths? Interested in learning how your organization can switch from traditional group health plans to a more flexible YourWay ICHRA plan? Visit onebridgebenefits.com.
Since its founding in 2013, Buffalo-based OneBridge Benefits has grown into one of the country’s largest administrators and technology partners for account-based health benefit plans. OneBridge now manages over 210,000 participants and $2 billion in assets. To learn more about the latest products and benefits offered by OneBridge, head to onebridgebenefits.com.
