Unlocking ICHRA: 3 questions to revolutionize your employee benefits strategy

The evolution of the U.S. health care system has been nothing short of profound. New advancements in science, technology, and patient care are enabling an era of personalized, precision medicine. Employers now face an important crossroads: how best to approach employee benefits in this evolving landscape?

As is often the case, innovative solutions have emerged through the trenches of all of this change. One example, the Individual Coverage Health Reimbursement Arrangement (ICHRA), has quickly grown in popularity given its wide spectrum of benefits – both for the employer and the employee.

Companies of all sizes are grappling with the challenge of escalating costs of providing health benefits to their employees, and there’s every indication that these costs will continue trending upwards for years to come. As of last year, employers were shouldering an average of $12,562 per employee, and oftentimes those lofty premiums don’t meet the specific needs of each employee, making the burden of the bill too much to bear for most.

The ICHRA model was born in 2020, and quickly gained popularity as a more practical choice that stood to help employers manage rising costs. Using pre-tax dollars to cover the cost of premiums, employers are able to navigate the complexities of this nuanced system in order to create high-quality health care benefits for their employees.

Given the complexities of the health care industry, it’s impossible for one size to fit all when it comes to coverage, and as the ICHRA model replicates, it’s essential to ask the right questions to ensure you’re making the right choice for your business. Here are the top three things to consider when vetting an ICHRA:

First and foremost, what are your goals?

Employee benefits play a huge role in recruitment, retention, as well as the bottom line of your business. Every one of these factors will impact and should therefore influence how you set up your contribution strategy.

When it comes to cost, not only are you evaluating your responsibility in providing health care for your employees, but recruitment and retention tend to be large expenses for an organization, and selecting the right health care benefits can help attract and retain good talent.

Outline and specify the goals you have for your business, and ensure the ICHRA model will support those. ICHRA, when done well, allows you to leverage flexibility in many areas, but it’s important to do the proper due diligence prior to committing to a plan.

What do employee advocacy and customer support look like?

One of the few common criticisms of the ICHRA model is the disconnect between the employer and the employee’s autonomy in selecting the best plan for themselves. In more traditional structures, every employee within an organization is served under one common policy and provider. In the case of an ICHRA, the employer won’t have visibility over the various plans, so there’s heavy reliance on the ICHRA administrator.

ICHRA offers the employee privacy, and as a result, the employee-employer relationship resets in this context. The lines of communication are open in traditional models, holding the employer accountable for answering questions and providing support when needed, whereas the ICHRA model requires the employee to work directly with a third party. This carrier possesses all of the necessary information to tackle employee concerns.

Related: How ICHRA can elevate your benefits strategy in the changing economic landscape

What does the change management process look like?

Much like anything in life, change can be scary. In the instance of evolving from traditional health care to ICHRA, it’s fair to expect some resistance, stress, and confusion. Establishing a system that caters to the health care needs of an employee does not come without emotion – which is all the more reason it’s crucial to seek an administrator with strong open enrollment experience.

The administration team exists to ease the pain points of this transition, so take advantage of their expertise and support. Instead of being handed a comprehensive benefits package, the employee is now responsible for reading every line of fine print, which is nothing short of overwhelming. Ask the necessary questions, gather all pertinent information, and trust the process. In doing so, you’ll find the process is far easier than you anticipated it to be.

This decision boils down to so much more than reducing premiums, it’s a matter of achieving financial efficiency while providing personalized solutions for each member of the organization. Determine and prioritize your goals, familiarize yourself with the system, and prepare for the transition. In doing so, you not only set yourself up for success, but you provide peace of mind and security for your employees, lending to a sustainable, successful business model and culture.

Stacy Edgar, CEO and founder of Venteur.