Popularity of alternative HRAs increasing rapidly, new research finds
Nearly 60% of employees accepting an HRA to fund their marketplace health insurance are between 18 and 44.
Individual Coverage HRAs and Qualified Small Employer HRAs are becoming increasingly popular among employers and workers.
“Health Reimbursement Arrangements are a popular bipartisan policy solution to cover more Americans with affordable, quality health insurance,” says Robin Paoli, executive director of the HRA Council. “Employees are empowered to choose the coverage they want from respected regional and national insurers, and employers are empowered to offer predictable, cost-effective benefits with fewer administrative burdens.”
The council has released its inaugural HRA Report looking at newer models of health reimbursement arrangements. It found that HRAs are doubling on average among all states, with significant growth across all industries, employer types and employee groups. Companies with 20 or fewer employees account for more than 90% of their adoption. ICHRAs have seen 350% growth since 2020, and QSEHRAs have nearly doubled during the same period.
“We’ve seen the number of large employers switching to ICHRAs grow exponentially,” says Jack Hooper, the council’s board chair and CEO and founder of Take Command. “But small and medium-sized businesses are leading the charge to deliver much-needed innovation in the benefits space, consumer empowerment and choice for employees, and cost control and flexibility for employers.”
ICHRAs in particular are extending benefits to traditionally difficult to insure groups, such as part-time and seasonal workers, which have seen large increases in the wake of the pandemic.
“We’ve been building technology to support portable benefits in the 1099 economy for years, and it’s incredible to see how ICHRAs are taking that model and using it to transform the W2 economy,” says Noah Lang, CEO and cofounder of Stride Health. “But as work becomes more fluid and flexible, we need to ensure that benefits do as well. In the years to come, it’s important that this regulation be expanded so that all workers, regardless of classification, can receive tax-advantaged contributions from any type of work arrangement.”
Among the study’s other findings:
- The average participation rate for employees offered an ICHRA or QSEHRA is 60%, comparable to industry standards for employer-sponsored group plans.
- The average age of employees covered by an HRA is younger than the typical Healthcare.gov enrollee, which means HRAs are bringing younger and healthier lives to the ACA marketplace.
- Nearly 60% of employees accepting an HRA to fund their marketplace health insurance are between 18 and 44.
Read more: HRAs: Do you have the right one that’s tailored to employees’ needs?
“Traditionally, employers have only offered one group plan that may not have worked well for employees in different geographic locations, demographics or family statuses,” says Victoria Glickman Hodgkins, CEO of PeopleKeep. “HRAs allow employers to offer a more personalized approach to health benefits.”