On average, employers' contribution rates for single employees range from $400 to $1,200 a month and $500 to $1,500 for families. (Photo: Getty)

Individual coverage health reimbursement arrangements (ICHRAs) are gaining traction, particularly in states that have strong individual insurance markets like California, Texas, Florida and Oregon, according to an analysis of early adopters by Take Command Health, a Dallas-based HRA administrator.

Beginning this year, employers are allowed to use ICHRAs to reimburse eligible workers for premiums and other costs associated with health insurance plans that workers buy for themselves in the individual marketplace.

Related: Some state health markets more favorable for ICHRAs

"With more than 200 companies signed up with ICHRA so far, we're starting to paint a picture of the future state of the market," says Jack Hooper, CEO and founder of Take Command Health, which so far has clients in 36 states as well as Washington, D.C.

"We're encouraged to see larger companies in addition to small businesses emerging as true pioneers in this new world of benefits," Hooper says.

Of the administrator's clients, 6 percent of ICHRA enrollees are "applicable large employers" (ALEs), 16 percent are mid-size companies with 10 to 49 employees, and the remainder are small businesses with less than 10 employees.

Certain industry sectors are leading in the early adoption of ICHRAs: nonprofit/associations (20 percent), professional organizations like engineers and architects (14 percent), tech companies (11 percent) and healthcare providers and services (9 percent).

Employers are customizing allowances to fit their budgets and employee needs, taking advantage of the uncapped contribution limits, according to the analysis. On average, rates for single employees range from $400 to $1,200 a month and $500 to $1,500 for families.

Most of Take Command Health's clients are keeping the reimbursement structure fairly simple, preferring to offer the same rates to all employees or vary by family status. Fewer employers are choosing the option to vary by age. Most commonly used classes include salaried versus hourly employees, geographic area, and full-time versus part-time.

Broken down by employer size:

• 66 percent of ALEs designed their ICHRA to reimburse premiums only and varied the rates by age of employee — a direct correlation to how their previous group plan benefit was structured.
• Small employers prefer to either vary rates by family status or contribute the same to all employees.
• 61 percent of employers are choosing to reimburse medical expenses and premiums, while the rest reimburse for premiums only. Small employers prefer to include medical expenses.

Take Command Health also polled employers on the driving factors that prompted them to offer an ICHRA. Employers told the firm they did not want to have to stress over huge renewals, worry about participation rate requirements, or manage the variability and unpredictability that comes with being responsible for employees' health costs.

The HRA administrator also polled business owners that do not currently offer ICHRAs, and found that some learned about ICHRA too late after regulations were announced last summer; many misunderstood what ICHRA does; and others worried that employees couldn't front the premium costs or would have trouble finding an affordable and quality health plan on the individual market. Premium tax credits also came into play.

"We're playing our part to educate business owners, benefits consultants and brokers on this new model of health insurance," Hooper says. "It's exciting to watch this trend begin to shape the market for the better."