Why ICHRAs are Good for Employees

After many years of switching carriers to deal with rising costs, most people are skeptical that any change to health insurance will be good for them in the end. But ICHRAs are a departure from the experiences of the past. 

94% of people surveyed were similarly satisfied or more satisfied after moving to an ICHRA

Source: Deft Research - 2024 Commercial Group and ICHRA Study

Advantages Over Group Insurance

Saving Money & More Affordable Plans: Employees can get the health plans options that might have lower costs than group insurance — from the same carriers, and from carriers that might be new to them. Before moving to an ICHRA, employers work with a broker to ensure it makes economic sense, so if you’re moving to an ICHRA, it’s likely in your financial interest. Check out these case studies for more examples of cost savings. 

With an ICHRA, your employer will set a defined contribution that you can use to purchase the health insurance plan that’s right for you and your family. Depending on your employer's contribution, you may be able to enroll in a plan that costs you $0, or you can buy a richer plan and have the balance deducted from your paycheck, pre-tax (just like on group insurance). For example, if your employer’s contribution is $600 and you pick a plan that costs $800, the difference of $200 would come out of your paycheck as a pre-tax deduction.   

Personalized Health Plans: Instead of being stuck with a single carrier and just a few plan options on group insurance, employees can buy any plan from any carrier that meets their medical and financial needs. With an ICHRA, you can search for health plans based on:

• Which doctors you want access to
• Which prescriptions you want covered
• Where you (and your dependents) live
• What kind of premium and out-of-pocket costs are best for you
• You can also look for plans with similar benefits to your current coverage 

Your Coverage is Portable: Since this is an individual health insurance policy, you can keep your plan if you change jobs. You would be responsible for the full premium once your former employer’s contribution stops. Or, if your next employer has an ICHRA, you can begin offsetting the cost with their contribution as well.

What Makes these ICHRA Advantages Possible?

New Federal Rules: ICHRAs were introduced by the federal government in 2020, setting up a new way for employers to offer coverage. ICHRAs have been building momentum ever since. 

A Larger Risk Pool: Plans bought through an ICHRA have millions of members, which spreads out the risk from insurance claims and helps keep costs stable. Compare that against group insurance, where the risk pool is often the size of a single business, where insurance claims from people in the company can drive up costs. 

ICHRA Platforms: So-called “benefit administration platforms” provide the technology that makes ICHRAs possible. Benefit administration platforms help you shop for health plans, decide which plan is right for you, coordinate enrollment, and handle payments.