Sponsored: ICHRAs continue to serve many with individualized insurance options

Sponsored: ICHRAs continue to serve many with individualized insurance options


It’s no secret that health insurance is a driving factor behind many of the major career decisions that working Americans make every day. Particularly now, in the post-COVID era, the modern workforce is especially health conscious. This adds up to one takeaway: employees expect to be well taken care of by their employers, meaning robust health benefit offerings that treat each policy holder as an individual are an absolute necessity.

According to the Society for Human Resource Management (SHRM), 56% of US adults with employer-sponsored insurance plans consider the quality of their health coverage a key factor in deciding whether to remain in their position. Additionally, 46% of respondents said that their health insurance was either the deciding factor or an influence on their decision to take their current job.

While group plans that offer “blanket” coverage to entire workforces has long been the standard for employee-provided benefits, a newer, more individualized option has been catching on in the form of individual coverage health reimbursement arrangements (ICHRA).

An ICHRA is an IRS-approved health benefit plan under which employers can reimburse their employees for premiums and other qualifying out-of-pocket expenses. This reimbursement of out-of-pocket employee health care spending is not taxed, allowing employers to control their costs while only requiring employees to pay for medical services they actually use. In fact, in a survey quoted by PeopleKeep.com, almost 70% of respondents said they felt the ICHRA model was more flexible than traditional group health insurance options.

Similarities between ICHRA models and health savings accounts (HSAs) are easy to draw, and indeed the two systems share several benefits. One particularly appealing similarity is how both models make it easier for employees to participate in their employer-provided insurance programs. Creating a reimbursement account typically involves a few steps and little more time commitment than applying for a bank account.

It’s clear to the business world that one-size-fits-all health care plans no longer meet employee expectations. Different backgrounds, different lifestyles and other factors can make for sizeable disparities in what individual employees expect from employer-sponsored benefits packages. With an ICHRA, employers can more easily offer employees a chance to choose the health care services and perks that mean the most to them.

Beyond the specific characteristics of ICHRAs, health reimbursement agreements in general have the broad appeal of allowing employers and employees to establish a system in which individual health insurance premiums incurred by the employee can be reimbursed on an as-needed basis. This way, both parties can flexibly meet a variety of individual health needs while keeping costs down and maintaining the tax-favored status of employer health plan contributions

Sources: Society for Human Resource Management, PeopleKeep, JP Griffin Group, Centers for Medicare & Medicaid services

Compiled by Kathy Ames Carr, Crain’s Content Studio – Cleveland

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