Benefits of Implementing ICHRA for Your Clients
Introducing the Individual Coverage Health Reimbursement Arrangement (ICHRA) to your clients cannot only potentially offer savings, but it also unlocks a range of advantages for both employers and employees. We will delve into the comprehensive benefits of adopting ICHRA within your clients' organizations.
Benefits for the Employer:
Flexibility: Employers can design ICHRA plans to suit their specific budget, industry, and employee demographics. The absence of a maximum contribution coupled with the ability to utilize 11 distinct employee classes provides a level of flexibility that other healthcare arrangements may lack. While customization is encouraged, consistency must be maintained within each employee class.
Cost Control: By implementing a defined contribution model, employers gain better control over healthcare costs, leading to more accurate predictions.
Tax Savings: ICHRA contributions are tax-free for both the employers and employees. Employer contributions are classified as contributions to a health and welfare plan, making them eligible as a deductible business expense.
Recruiting & Retention: Offering an ICHRA to full-time, part-time or seasonal workers can be a powerful employee benefit and could potentially enhance recruitment efforts and improve employee retention.
Benefits for the Employees:
Personalized Choice: Employees have the freedom to choose their own individual health insurance plan based on their unique needs and preferences. Our platform has a user-friendly provider search tool simplifying the process of finding a plan tailored to their requirements.
Affordability Assurance: Large group employers must undergo affordability testing to ensure coverage remains affordable for all employees, thereby complying with Affordable Care Act standards. ICHRA's structure supports this requirement, safeguarding accessibility to healthcare coverage.
Control: ICHRA allows individuals to exercise more control over their healthcare spending. This hands-on approach encourages participants to make choices that align with their coverage preferences and financial situation.
Our observations reveal that ICHRA participants predominantly gravitate towards gold and silver level plans. Additionally, we've noted a rise in enrollments for Health Savings Account (HSA) compatible plans, particularly when the employer contributes to employees' HSAs.
Portability & Ownership: Because the plan is portable, the employee can keep their plan should they lose their ICHRA eligibility. This continuity ensures that employees can maintain their coverage during times of transition.
Tax Savings: Beyond the benefits of tax-free employer contributions, ICHRA offers another tax advantage—contributions are exempt from payroll taxes. This represents an opportunity for employees to enjoy potential tax savings.