Four Reasons Employers should consider Individual Coverage Health Reimbursement Accounts
August 14, 2020
More employers are beginning to explore Individual Coverage Health Reimbursement Accounts (ICHRAs). If you fall into one of these four scenarios, you may want to consider an ICHRA.
- Trouble Meeting Participation Requirements
Many employers, especially those with a significant number of low-wage workers, struggle to meet participation requirements imposed by a health insurance carrier. An employer can offer to fund an ICHRA at any level, and since the employees are using that money to help purchase their own individual health insurance plan, employee participation rates do not matter.
- Want to Offer Something to Part-Time Employees
Very few employers offer group health plan coverage to part-time employees. An employer could make an ICHRA offer to part-time employees with a relatively small employer contribution that may still be seen as an attractive benefit by these employees.
- Applicable Large Employers Offering Only Minimum Essential Coverage (MEC)
Some large employers have opted to offer a limited coverage “skinny” MEC plan solely for the purpose of avoiding the §4980H(a) penalty. An employer may be able to make an ICHRA offer to the same employee population with an employer contribution that is less than the typical cost of a MEC plan
- High Health Plan Rates Due to Claims Experience
Since individual health insurance plans are community rated, employee claims experience will have no direct impact on individual insurance plan costs. Employers with worse than average claims experience could see a decrease in total health care spend by moving to the community rated cost structure.
Do you think an Individual Coverage HRA could benefit your company?
