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What's Different for Brokers (And How ICHRAs Work)
In the first year, an ICHRA client will require more of your attention, but once an ICHRA is up and running, the lift is significantly lighter — and you’re still earning revenue.
Let’s cover the key steps involved with an ICHRA and, at the same time, unpack how things change for brokers compared to group.
Select a Benefits Platform
Benefits platforms act as an administrator, coordinating transactions, providing decision support to employees, and serving as a place to enroll.
What’s different: Instead of helping clients shop for carriers and help design their plan offering, they need your expertise to find a benefit administration platform that meets the needs of their business and employee population. And because platforms typically run an initial cost analysis, clients need your help in validating that an ICHRA makes more economic sense than their group plan.
Define Employer Contribution
Employers set their overall budget and the pre-tax contribution they will make to each eligible employee class.
What’s different: Instead of helping clients fight for better rates with carriers, they’ll need your help creating a matrix of employer contributions by employee class, geography, and other considerations.
Shop Marketplace Plans & Enroll
Employees shop plans based on their own unique needs and enroll through the chosen benefits platform.
What’s different: Instead of explaining plan benefits to employees for a single carrier in an annual meeting, your clients will need your help explaining what ICHRAs are, sharing plans that mirror what they had on group insurance, and helping people understand the enrollment process, as well as what to shop for. The first year tends to focus on fundamentals, while subsequent years become increasingly focused on optimization and helping employees become savvy consumers.
Employees Get Reimbursed
Employees are reimbursed for health coverage based on employer-defined contributions.
What’s different: Instead of uniform, per-paycheck expenses for everyone on group plans, costs will depend on the plan the employee selects relative to the employers’ contribution. Some employees could choose a plan that’s fully covered by the employer’s contribution and pay nothing additional themselves. Others could spend more than their employer’s contribution covers and have the balance deducted from their check or get reimbursed after submitting the expense. ICHRA reimbursements can be structured in different ways, some of which include whether unused funds roll over, are recouped by the employer, or can be used for other employee health expenses. Your client will need your help determining the best approach.
A Comparative Overview of ICHRAs and Group Plans
ICHRAs
Plan Selection
Employees choose their own individual plan
Cost Predictability
Employer sets a defined contribution (fixed budget)
Employee Personalization
High — employees choose plan that fits their needs.
Administrative Burden
Lower — managed by benefit platform.
Network Flexibility
Broad — employees choose local or national networks based on need
Participation Requirements
None — no minimum participation rules
Portability
High — employee can retain their coverage if they leave, they simply pay on their own
Regulatory Compliance
Complies with ACA if affordability and Minimum Essential Coverage rules are met
Compensation Model for Brokers
Consulting fees, PEPM/PEPY, platform referral, possible individual carrier commissions
Traditional Group Plans
Plan Selection
Employer selects one or a few plans for all employees
Cost Predictability
Employer sets a defined contribution (fixed budget)
Employee Personalization
Low — limited plan options, often mismatched to individual needs.
Administrative Burden
Higher — employer/broker manages enrollment, renewals, claims, etc.
Network Flexibility
Limited — tied to carrier's network and geographic coverage
Participation Requirements
None — no minimum participation rules
Portability
Low — coverage tied to employment
Regulatory Compliance
Complies with ACA through Minimum Value and Affordability standards
Compensation Model for Brokers
Commission-based, tied to group carrier premium
For additional detail on what’s different about ICHRAs, check out Why ICHRAs Make Sense for Brokers.
Explore Other ICHRA Topics for Brokers
Talk With Our Team
Considering an ICHRA raises new questions. Our team is here to help.