The many forces shaping today’s employee benefits conversation, and why ICHRAs are the answer
The pandemic highlighted the shortcomings of group health plans and what happens when employees lose their jobs (and coverage).
The pandemic has fundamentally changed the way we work. It’s contributed to a rise of hard-to-insure remote workers and a growing need for recruitment tools for service and hospitality workers. It’s shined a light on the shortcomings of group health plans when employees lose their jobs (and coverage), and employers are left with little flexibility. It’s necessitated companies to work smarter and more efficiently and their benefits solutions are no exception. After all, they’re employing a whole new type of workforce. Paired with the ongoing challenges of insuring part-time and hourly employees, and annual group plan renewal hikes, the stage is set for ICHRA to continue to thrive.
Now in our third year of signing businesses up for the individual coverage HRA, we have some solid data to learn from and a lot of experience behind us as a first to market provider. Our recently published ICHRA10 report confirms what we’ve believed all along: the individual coverage HRA is expanding coverage and promoting choice; it’s stabilizing the ACA; and it’s attracting all kinds of businesses.
It’s also providing better premium coverage than the average group plan. Across the country, the average ICHRA reimburses $460 for singles and $560 for families, which covers 147% of lowest-cost bronze plans and 122% of lowest-cost silver plans. Group plans, in contrast, only cover 84% of single plan premiums, with the rest coming out of employees’ paychecks. Those on small group plans fare far worse; 35% of small group plans cover less than half of premiums, with the remaining financial burden falling on the employees.
What’s more telling is the types of businesses it’s attracting. Small businesses comprise the majority of our business—80% are net new to benefits, meaning their employees are receiving employer help with their health coverage for the first time at a financial entry point that works for smaller companies. Large companies with 50 to 1,000 employees, however, are the fastest-growing segment, seeing 210% growth over last year. Companies of all sizes are coming on board—small companies hoping to help employees, larger ones with medically underwritten group plans looking to satisfy the employer mandate, or 1000+ employee companies that are self-funded with a multi-state footprint. ICHRA wins across the spectrum for its optimized approach to risk de-management, choice, and flexibility.
ICHRA promotes choice for employees; they’re receiving high-quality, ACA-compliant health care plans that cover ten essential health benefits and work best for their families, unique health needs, and budgets. Our data shows that employees on our platform chose plans from a wide range for carriers, with a nearly equal breakdown among metal tiers, and half of those chose plans with deductibles less than $2,850 per year (compare that to $3,140 each year for a typical small group plan).
A crucial piece of the individual coverage HRA is eliminating the stress that comes with employees shopping for health insurance, sometimes for the first time. As the only administrator to also offer white glove enrollment services, our dedicated enrollment team completed 1.3 calls per employee on our platform and 27,000 chats to walk them through the process. We’ve leveraged technology to help employees navigate the process as well; our new prescription search feature, as well as our doctor search tool on our platform, provide valuable insight as employees shop for plans.
The bipartisan and tri-department ICHRA delivers on a campaign promise of the Biden administration to strengthen the ACA and expand coverage. The rise in ICHRA obviously signifies more individuals being added to the market, but the more interesting takeaway is who is joining the risk pool. The average age of employees on our platform is 38 and the median is 35, compared to the average shopper on Healthcare.gov, who is anywhere from 55 to 64. What that means is that healthier, less costly individuals are driving down costs through the ACA marketplace for everyone’s benefit.
For this reason and other factors, the individual market continues to improve. Premiums have stabilized (along with MLRs), 30 insurers entered new states, 61 insurers expanded service areas, giving employees an average of 5 insurers per state to choose from. With a growing number of geographies with IFP rates lower than SG, employers across the country are realizing that their benefits spend can stretch further with an ICHRA. It’s time to take a hard look at the forces shaping today’s employee benefits conversation and how the individual coverage HRA can help.
Jack Hooper is CEO of HRA administrator Take Command and Chairman of the Board of the HRA Council, a nonpartisan advocacy group dedicated to creating a vibrant HRA market by easing employers’ ability to offer HRAs and employees’ ability to use an HRA to enroll in coverage.
Read more: