What companies should prioritize when navigating out-of-state employee health benefits
Individual states have their own laws and regulations governing health care coverage, and companies must ensure that their fully insured benefit plans comply with each of these laws.
Between 2019 and 2021, the number of people working from home tripled from 5.7% to 17.9%. Even as we move past the pandemic peak, more companies are expanding their operations across state lines. In doing so, they face a new challenge when it comes to providing health benefits for their employees. The complexities of the regulatory landscape and varying costs of health care from state to state make it difficult to provide the best possible health care coverage for every employee. But adjusting benefits for a changing workforce is linked to a higher level of job satisfaction, which contributes to more productivity, increased profits, and lower turnover. The following four key elements should be considered to properly navigate out-of-state employee benefits.
- Network access
It’s no secret that America has a health care problem: Compared to other high-income countries, America has the highest rate of people with multiple chronic health conditions, maternal mortality, and death by avoidable and treatable conditions. What’s more, many Americans also lack access to quality health care providers, especially depending on their geographic location. Over a third of the U.S. population is without adequate access to primary care providers, pharmacies, hospitals and trauma centers, and other necessary health care infrastructure.
With so many barriers already preventing access to health care, the last thing you want to do is offer a health plan that forces employees to drive hours to see an in-network provider. Sadly, the one-size-fits-all approach of traditional group health insurance rarely fits everyone — especially when a company has a geographically dispersed workplace. Alternatively, an Individual Coverage Health Reimbursement Arrangement (ICHRA) is an account-based health plan that lets employees choose their own health insurance from the individual market and receive pre-tax reimbursement from their employer. Aided by broker expertise, ICHRAs can empower individual employees to choose their own level of coverage based on the carriers available in their area. They can select plans that will work based on the in-network doctors and medical facilities accessible to them.
- Cost management
Health care renewal rates are skyrocketing, with companies seeing average increases this year of 6.5% on traditional group plans — and as high as 68% depending on the state and industry. For brokers and human resources teams alike, negotiating even one carrier’s rates down can be a full-time job that doesn’t always yield favorable results. If companies have to repeat the process for multiple states, it can quickly become untenable.
When businesses switch to an ICHRA, their plans are no longer tied to their employees’ claims risk, which allows them to sidestep the renewal process entirely. Because the risk is dispersed on the individual market, rates stay flat and predictable.
- Education and support
ICHRAs are a game-changer for companies with out-of-state employees, but benefits are only a selling point if your team knows how to use them. Nearly three-quarters of employees spend less than an hour reviewing their benefits, so companies must prioritize employee communication and support.
ICHRA administrators, in partnership with the broker and consultant experts, are the perfect combination to educate HR teams and employees about how to use their platform and choose the best plan for their needs — while accounting for out-of-state variations. This can relieve HR teams of a significant administrative burden: allowing employees to enroll on their own through a self-service benefits portal and engage in carrier and plan design options that best fit their needs. In addition, education and support for qualifying life events, coverage questions, and more are provided via white-glove service that will enhance employee satisfaction with the individual plan.
Compliance with state laws
Individual states have their own laws and regulations governing health care coverage, and companies must ensure that their fully insured benefit plans comply with each of these laws. To further lighten the administrative load, ICHRAs offer built-in ACA (Affordable Care Act) compliance. ICHRA administrators will ensure that the contribution amount a company offers its employees meets the affordability criteria — taking into consideration both age and location of employees. Moreover, because employees can opt to take their plan with them if they leave their employer, ICHRAs virtually eliminate the need for COBRA continuation coverage. Employers still must offer COBRA coverage, but there’s little incentive for employees enrolled in an ICHRA to accept it.
Related: More American workers offered ICHRAs and QSEHRAs, with no sign of slowing down
Considering all of these factors, providing out-of-state employee health benefits can be a complex and challenging task. However, by prioritizing compliance with state laws, network access, cost of health care, and employee communication and education, companies can successfully navigate this challenge and provide their employees with the best possible health care coverage.
Matthew Kim is the CEO and co-founder of SureCo, a health and insurance technology company.