Employers

When to Consider an ICHRA

Thanks to their flexibility, benefits, and potential to serve businesses of all sizes, Individual Coverage Health Reimbursement Arrangements (ICHRAs) are a good fit for all kinds of companies. Below are some of the most common reasons companies consider an ICHRA — and why you might as well.

1

You have unaffordable coverage or large annual increases.  

ICHRAs make health plans more predictable and affordable in three key ways:

  • You set your pre-tax contribution amount so you know what your expenses will be from one year to the next.
  • There are plan options for every budget, so employees can choose what’s right for them.
  • The risk pool for individual marketplace plans includes millions of people, offering more cost stability than a risk pool the size of a single business, which can be vulnerable to health events and claims in your employee population. .

2

You have a diverse and/or geographically distributed workforce.

It’s obvious, but important: employees are in different life stages, they have different medical needs, different budgets, and different preferences for doctors and networks. And if your team is spread across multiple states, a single carrier might not be strong in all locations. Group insurance doesn’t address these challenges well. ICHRAs empower employees to choose plans based on their unique needs and locations.

3

You want a recruiting and retention advantage. 

ICHRAs provide individual choice that group plans can’t match, helping to draw talent to your organization. And employers who are offering insurance for the first time gain the opportunity to reward staff with a pre-tax benefit.

Employees are happy with ICHRAs too. In one study, 94% of people reported being as satisfied or more satisfied after switching.  

4

Managing risk among your employees is difficult.

With traditional group insurance, your costs are closely tied to the health and claims of your workforce — making budgeting unpredictable. ICHRAs change that. Because the risk pool for ICHRAs is not tied directly to your company, your expenses are not directly impacted by the health and lifestyle choices of your employees. And your staff is still able to take advantage of wellness and rewards programs offered by their health plan carrier.

5

You want to optimize wages. 

ICHRAs have been shown to provide cost savings for employers and employees alike, allowing dollars to go further. As an employer, your savings can be channeled into wages or other benefits programs that help attract and retain your workforce. Plus, by saving your employees money on health insurance (depending on their plan choice), they get to keep more of their paycheck.

6

You need flexibility among employee classes. 

The way ICHRAs are applied has a lot of flexibility. For example:

  • All employees can be covered by an ICHRA
  • Some employees can be on an ICHRA while others remain on group insurance
  • Some employees can be on an ICHRA and some can have no benefits
  • All employees can be on an ICHRA with varying contributions based on employee classes

Explore Other ICHRA Topics for Employers

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