Can the TRS ActiveCare (TRSAC) government health insurance program for Texas school districts effectively compete with ICHRA? Which is better? It’s up to the reader to decide.
By Bill Rusteberg
It’s getting close to that time of year again when Texas school districts must decide whether to continue membership in the TRS ActiveCare government health insurance program. By statute they must give written notice of termination no later than December 31, 2024 for an effective date of September 1, 2025.
One alternative to TRSAC has been overlooked by most districts. School districts of any size can offer an ICHRA defined contribution plan allowing plan members to choose coverage that best suits their individual needs.
Each district decides what their contribution will be through Individual Coverage Health Reimbursement Accounts (ICHRA) for the benefit of each participating plan member who in turn apply the district’s contribution towards a plan of their choice based on their needs.
HIGHLIGHTS
- Eliminates risk
- Fully insured through recognized insurance companies
- Nation’s largest risk pool with millions of covered members
- Annual rate guarantee
- Average rate increase below industry norms
- Pre-existing conditions covered
- No underwriting necessary
- Employee-owned health insurance vs district-owned health insurance
- Not tied to employment – fully portable
- Removes districts from the business of insurance
- Allows districts to set their budgets and forget about annual rate increases
- District decides what their cost will be and not the insurance company
- No participation requirements
- ACA compliant solution for any size district
- Federal mandated benefits
- Federal oversight of network adequacy
- Federal tax subsidies may be available in certain circumstances
- Single source vendors – No public bidding required
- Numerous plan management companies to choose from if needed
These are a few of the benefits ICHRAs provide district employees. There are more.
Most districts are unaware of this option. “Why haven’t we heard about this? is a common question we get from district officials. One reason is a traditional group health insurance broker’s livelihood and relevancy is threatened. Low commissions and the inability to churn business every year or so makes brokers less relevant. They sell against ICHRA for self-preservation.
We know all their arguments against ICHRA and have compelling answers for each. The ICHRA side of the argument wins every time.
Another question we get most often from district officials is “What other districts are doing this?” School districts place a lot of value on this question. If a lot of districts are doing this or that, then it must be good. So in this case ICHRA must be bad because, to the best of our knowledge, there is only one district in the entire State of Texas that has adopted ICHRA to date.
Other districts we have met with are intrigued but hesitant to act. Common sense, reason and logic does not always carry the day.
Is TRSAC a more attractive option? That’s in the eye of the beholder. Both are defined contribution plans. Both essentially remove districts from the business of insurance. Both offer ACA compliant health plans but the difference is ICHRA offers many more choices than does TRSAC. Plan members decide what’s best for them and own their coverage. Under TRSAC or any other traditional health plan the employer owns and controls the coverage.
Which is better? Both options make sense and are similar in many ways. If more choice is the deciding factor, then that’s your choice!
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Eric explains ICHRA:
