Individual Coverage Health Reimbursement Account (ICHRA)

Good news for frustrated Plan Sponsors. They don’t have to screw with group health insurance anymore………………….

Why do employers continue to beat themselves up over offering health care for their employees? Costs go up every year, the annual renewal process is grueling and unpleasant, employees complain, HR spends over half their time babysitting employees and fighting insurance companies. One misstep and the employer can be sanctioned by government diktats. Why in hell would a sane owner of a company want to go through all of this?

Now there is a better way. Employers can get out of the health care business by offering employees an ICHRA. And the best part? From the employer’s perspective it can be a Defined Contribution Plan limiting the employer’s cost.

Experts discuss new health insurance option that could be used by small businesses to attract workers

By Jenna deJong

A new health insurance model officially became available last year, but outreach and education efforts were stalled by the pandemic, and some local businesses are still hesitant to learn more.

The option, called an individual coverage health reimbursement arrangement, is available to large and small businesses. According to Peak Health Alliance spokesperson David Rossi, the plan is an alternative to a small or large group coverage plan and could offer more flexibility to businesses and employees.

It works like this: Businesses who opt in give employees a tax-free stipend to use for health coverage. Those employees use that money to pay for coverage they select through Connect for Health Colorado, the state’s official health insurance marketplace. Each employee gets to choose their own coverage plan suitable to their needs. Because that plan is tied to the employee rather than the employer, the plan stays with the individual, even if they leave their place of employment.

On Wednesday, April 28, the Summit Chamber of Commerce and Peak Health Alliance hosted a panel of health experts to discuss affordable health care. Panelist Jack Hooper, CEO of Take Command Health, said he believes the reimbursement program can be beneficial because it gives the employee more control over their own coverage. Plus, employers aren’t expected to find a single plan for all employees that also has the most competitive premiums.

“The group market (is) functional,” Hooper said. “We’ve relied on it for a long time, but the reality is employers are not good negotiators at health care.”

Hooper noted that many employers use health insurance as a benefit and tactic to recruit talent. But businesses with seasonal or part-time staff might opt to use the tax-free stipends to attract workers, especially as many struggle to restaff.

“Employers still want to provide a benefit for recruiting, and I think everyone agrees that we want employers to help with health care, but we really don’t want them negotiating deals,” Hooper said. “I think if they can give money to employees to go purchase a plan, that’s maybe the better route.”

This new model has officially been around for over a year, but CEO of Peak Health Alliance Claire Brockbank said she still sees some businesses hesitating to learn more.

“In the winter, when most renewals happen and most businesses pick their coverage for Jan. 1, or when a lot of businesses do, I think so many businesses were just trying to keep their head above water with COVID, and they just didn’t have the bandwidth to learn something new,” Brockbank said.

Not only was the timing bad, but the option is still so new that many business owners are hesitant to implement it in their workplace.

“Their broker may not know about it,” Brockbank said. “At Peak (Health Alliance), we have preferred brokers that have to go through training on (individual coverage health reimbursement arrangements) so they are able to provide that kind of insight. A lot of brokers have not necessarily made that extra investment.

“I think that’s a big part of it, too, is that it’s taking until the employer’s broker tells them about it, (so) they’re a little bit apprehensive.”

Brockbank went on to acknowledge some misconceptions about the program, which include assumptions that individual plans don’t provide as good of coverage as group plans, which she said isn’t true. Though structured differently, Brockbank said the stipends allow employees of the same company to choose a plan that best fits their needs.

Panelist Adela Flores-Brennan of the Colorado Consumer Health Initiative said she also thinks this model offers additional avenues to insure employees.

“It really helps to increase the number of choices that small businesses have for providing health care for their employees,” Flores-Brennan said.