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Year after year, the escalating costs of health care have become a significant concern for both employers and employees alike. As health care premiums continue to soar, businesses are searching for innovative strategies to manage these expenses. The time has come to start thinking about next year, and if you're a large employer, you likely have already seen your renewal quote – and chances are it wasn't packaged with good news.
Health care costs are increasing on average by 8% or 9%, but in some cases, the jump could be as high as 20%-30%. It's not uncommon for a single individual with increased health care needs – whether that be due to illness or growing a family – to tip the scales in favor of higher premiums for the entire team.
A little effort may go a long way in reducing total health care costs regardless of the percentage increase. After all, organizations are looking to brokers to seek out the best opportunity for their employees. If one isn't doing the necessary due diligence to shop for the best deals, someone else out there is. Who's to say a company won't shift gears to find a broker willing to get creative to seek better solutions?
One such solution gaining traction is the Individual Coverage Health Reimbursement Arrangement (ICHRA). For brokers, ICHRA presents a unique opportunity to negotiate large renewal plans downward.
ICHRA is a type of health reimbursement arrangement (HRA) that allows employers to provide their employees with cash to buy an individual health insurance plan and pay for qualified medical expenses. It is the result of recent regulatory reform in health care and can offer employers millions of dollars in cost savings on their employees' health care spend.
|How ICHRA can save clients millions
ICHRAs take advantage of the growing scale of the ACA individual health insurance market. In 2024, ACA enrollment exceeded 21 million people. Individual health insurance plans are underwritten at the state level which now include hundreds of thousands of people. These risk pools are now bigger than some of the largest employers in the country, and larger risk pools offer volume discounts and better pricing. On top of all of this, many states have introduced reinsurance programs that have further driven down premium costs. The result? Employers and employees can access the same familiar insurance carriers and provider networks at a fraction of the cost.
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