By Brad O’Neill – The Wizard of ICHRA & Choice Benefits
What if the employee is financially better off declining the ICHRA?
Under current ICHRA rules, if an ICHRA is deemed unaffordable, an employee may decline the ICHRA and potentially qualify for Marketplace premium tax credits instead. In certain situations, family glitch rules can also create meaningful subsidy opportunities for spouses and dependents.
For some families, we’re not talking about a few dollars. We’re talking about thousands of dollars per year.
So why isn’t this analysis part of every ICHRA conversation? One reason may be incentives.
Most ICHRA vendors generate revenue from administration, enrollment, participation, reimbursement activity, or some combination of the above.
If an employee declines the ICHRA and enrolls through the Marketplace instead, that individual may no longer be participating on the platform.
In other words:
The employer may win.
The employee may win.
The vendor may make less money.
That’s not a criticism of vendors. It’s simply the reality of how many business models work.
Which is why employers should always ask one additional question:
“Show me the analysis if the employee DOESN’T enroll.”
When we evaluate opportunities, we often add one more column to the spreadsheet: How much with the Government pay?
That single column can completely change the conversation.
+ Sometimes the best answer is an affordable ICHRA.
+ Sometimes it’s an unaffordable ICHRA.
+ Sometimes it’s a targeted carve-out.
+ Sometimes it’s leveraging subsidy opportunities for dependents.
The goal shouldn’t be maximizing ICHRA enrollment. The goal should be maximizing value for the employer and the employee.
That’s also why I believe the number of employees who have been offered an ICHRA is substantially higher than the number reported as being enrolled in one.
Most industry reports count participants.
They don’t count employees who were offered an ICHRA and chose a different path because it produced a better financial outcome.
Maybe the most important metric isn’t:
“How many employees enrolled?”
Maybe it’s:
“How many employees ended up in the best possible situation?”
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