Top 3 ICHRA trends for brokers to know during open enrollment

There’s no question individual coverage health reimbursement arrangements (ICHRAs) are growing in popularity. In fact, one-third of CFOs are considering ICHRAs for some of their active employees, according to a Willis Towers Watson study. 

This health care reimbursement coverage that rolled out in 2020 provides employers of any size with another option to offer health benefits to their employees – a plan that reimburses people for the purchase of their individual health insurance on the open market. It’s also a plan type that rounds out brokers’ portfolios and ensures they’ll have a flexible option for all their clients.

Here’s a look at some of the top trends we’re seeing in the marketplace to help ensure that your ICHRA knowledge is fresh as you walk into client meetings this open enrollment season. 

Individual policies are becoming more competitive over time

Since ICHRAs were introduced in 2020, employers have had an expanded way to offer value to everyone punching in on their timeclock. Companies can offer the same group of employees either group benefits or a reimbursement through an ICHRA. Health insurance is slowly breaking out of the one-size-fits-all mentality. 

It makes sense that as these individual policy options grow, rates become more competitive. According to Ideon, 24 states across the country provide individual policies that are more affordable than group policies. Clearly, carriers see ICHRA as an important place for them to invest. And now it’s an option that can rein in spending while still offering employees a valuable benefit.   

Defined contribution means greater flexibility for the member

When it comes to choosing an ICHRA, it can be a win-win situation for both employers and employees. With defined contribution through an HRA, the employer chooses the dollar amount they want to contribute to a group of employees, allowing the company to provide valuable benefits while staying on budget. 

After that, individuals have the freedom to choose any health plan from any carrier available in the market. With traditional health benefits, the employer often chooses the insurer along with two to three plans to offer – and that’s it. In the case of ICHRAs, the employer can cap their cost and open up the whole market to their employees. It maximizes the flexibility for the member so they can buy the plan that best suits their needs.

 Individual policies can curb costs for certain populations

While a group policy might be a great option for many employers, it’s not the best for all. If a group runs at a high rate with an unaffordable cost compared to a typical group of that size, ICHRAs can offer better rates. Individual policies don’t look at preexisting conditions; this means an individual’s health background doesn’t impede them from getting coverage like it could with traditional group health plans. This protects the employer by eliminating strain on a group plan and lets them give maximum flexibility to their employees, who can then go into the market and choose a health plan without hesitation.

 A seamless delivery makes all the difference

Just because members are choosing their own plan independently through an ICHRA doesn’t mean they should have to go without any support. 

Many health benefits companies offer platforms that make ICHRAs look and feel like a regular group plan. Typically, these built-in support teams help employers with setting contributions, and help employees with enrollment and answering questions on different individual plans. It takes a straightforward delivery system like this in order for ICHRA to be successful for everyone: the employer, the member and the broker.

 As more and more states across the country offer ICHRA as a viable solution, it’s time to open up the discussion with clients about the perks of this creative and flexible option.

Thomas Sass is the vice president of business development at Gravie.