ICHRA: A growing health benefits solution for part-time employees

The number of part-time employees in the U.S. has reached an all-time high of 27 million, according to the latest Department of Labor statistics. 

In the wake of the pandemic, we’re seeing a significant increase in people opting for part-time roles, particularly women. Gen Zers and millennials also increasingly value the work/life balance of a part-time schedule. 

Research also shows that more small business employees have also been working fewer hours. In December 2019, part-time jobs accounted for 43% of all hourly jobs, and by December 2023, they accounted for 47%.

This increase in part-time employment presents employers with a benefits challenge. While not required, as many as 25% of part-time employees have access to health benefits through their employers. 

Retaining employees through benefits

Offering health benefits to part-time employees shows employers care about their team’s health and wellbeing, and it’s a great way to attract and retain talent. 

One rising solution is Individual Coverage Health Reimbursement Arrangements (ICHRAs). Offering an ICHRA, allows employers to contribute pre-tax dollars to their employees, who are then empowered to choose a health plan through their state’s marketplace. 

An ICHRA can be an excellent choice for part-time employees since it offers the flexibility to select a plan that covers an individual’s needs and, if needed, their family’s coverage. Employers, in turn, benefit from the cost predictability and the reduction of administrative work with an ICHRA solution.

Since ICHRAs first became available to employers in 2020, they have skyrocketed in popularity. According to the HRA Council’s latest annual report, ICHRA adoption grew 29% from 2023 to 2024. 

Last year, 89% of decision-makers said they would consider an ICHRA for a health benefits solution in the next three years, according to a survey of 500 U.S. health benefits decision-makers that we conducted. 

Below are three reasons ICHRA may be ideal for part-time employees this open enrollment season:

Administrative burden

Our research also found that 71% of employers consider managing health insurance one of the most difficult parts of their job. On average, benefits professionals spend nine hours per week managing health benefits for their company. Offering an ICHRA can help unload this administrative burden for human resources and benefits teams.

With an ICHRA solution, external plan administrators do all the heavy lifting. This includes educating employees about ICHRA, helping them make informed choices on plans available in the individual marketplace, understanding and improving their member experience, tracking participation rates, and managing financial flows through ensuring seamless payments and synchronizing with carriers. For employers already overwhelmed with administering benefits to their full-time employees, ICHRA may be a solution that ensures part-time employees are taken care of, without adding more to their plate. 

Flexibility

Another advantage of ICHRA is the flexibility they provide. Employees can choose a plan through their state’s marketplace, allowing them to select coverage that best fits their needs and those of their families. This personalization ensures that employees receive tailored health care solutions, enhancing their satisfaction with the benefits provided. This flexibility also empowers employees by giving them greater control over their health care decisions and promoting a sense of ownership and engagement with their benefits. The result is more efficient coverage from the employer, and employees who truly value their benefits because they satisfy their unique health care needs. 

Related: 10 FAQs about ICHRAs

Cost certainty

Another aspect of ICHRA that employers will appreciate is the resulting cost certainty. Employers pay a fixed contribution amount, no matter what their participants’ claims net out to that year. 

One strategic way employers can use ICHRA is by strategically dividing their different employee populations and offering ICHRA to certain segments as part of a hybrid solution. 

There are 11 different classes that employers can use to organize employees, but what we most often see is a different plan for part-time employees vs. full-time employees. We’ve noticed many employers offer ICHRA to their part-time and seasonal employee populations, and then a level-funded plan for their full-time employees. 

For example, Wealshire, a Minnesota-based dementia and Alzheimer’s care organization with both full-time and part-time caregivers, has implemented an ICHRA solution with great success. After struggling with rising prices for their traditional group health plan and later taking on all the risk by moving to a self-funded model, Wealshire’s president felt desperate for an option that offered cost certainty yet still provided high-quality coverage for his staff. 

Since implementing an ICHRA this year, Wealshire has gained more control over its benefits spending and achieved strong enrollment numbers, while cultivating a satisfied employee population that appreciates more choices. Overall, the company has experienced a 30% decrease in health benefits expenses. 

Wealshire’s experience is not uncommon for those trying out an ICHRA solution. With the number of part-time employees at an all-time high, addressing their needs will be front and center during open enrollment. As more HR and benefits leaders take time to learn about ICHRA, more plan options will open up to part-time workers and their families.

Andrew Reeves, Senior Vice President and General Manager of Gravie ICHRA