Helping Employer Clients Put Health Care Reimbursements to Work

According to the KFF 2023 Employer Health Benefits Survey, 83% of firms with 10 to 199 employees offer health benefits to some of their workers, while only 42% of companies with three to nine workers do so.

The situation is even worse for nannies, home health aides and other domestic workers: In 2018, only 19% had employer-provided health insurance benefits, according to the Economic Policy Institute.

This significant gap in coverage has employers (and employees) searching for new options.

One solution that's gaining traction today is the individual coverage healthcare reimbursement arrangement, or ICHRA.

This model allows employers to make tax-advantaged contributions to employees who enroll in a health plan through the individual marketplace.

Since first becoming available to employers in January 2020, ICHRAs have seen a surge in adoption among employers.

Employer ICHRA Perception Data

As ThinkAdvisor previously covered, ICHRAs have been gaining steam, particularly in states like New Jersey, where individual plan premiums match or are lower than small group plans.

Currently, ICHRA is more competitive on cost with small group plans in just over half of all U.S. states.

To better understand employers' awareness, interest and concerns related to ICHRA, Gravie recently partnered with Wakefield Research to conduct a nationwide employer survey of 500 health benefits decision-makers who don't currently offer ICHRA.

While the study showed favorable interest in ICHRA among employers, it also identified some barriers holding many back from offering this solution today.

Survey Details

Below are key findings that financial professionals can consider when helping clients navigate their health benefits expenses.

1. The ICHRA is projected to grow as a health benefits solution.

As many as 89% of benefits decision-makers are considering health benefits through an ICHRA for their employees in the next three years.

Furthermore, 87% agree that an ICHRA may be a strategic, long-term fit for giving their employees the flexibility to choose an individual health plan that works best for them.

With the expected increase in ICHRA enrollment through state marketplace offerings, financial professionals can help clients build a comprehensive benefits strategy that aligns with their financial plans.

At Gravie, we see clients of all sizes offering our ICHRA solution alongside our small group health plan.

For some clients, an ICHRA might be a short-term ramp to a group plan, while for others, this model offers a sustainable strategy for the future — and not just for small and midsize groups.

For companies offering a hybrid of both models, ICHRAs serve as a way to round out employee options, providing more choice and flexibility for diverse populations.

2. Barriers remain.

While interest is high, nearly one in five benefits decision-makers at midsize and large companies worry ICHRAs may be overwhelming, warranting additional education for employees, which they do not have the bandwidth to support.

For nearly three in four, managing health insurance is one of the most difficult and time-consuming parts of their job, demanding on average nine hours per week.

For many of these individuals, managing benefits is just one of the many hats they wear, and they're feeling stretched thin.

Over 80% noted multiple administrative barriers that are stopping them from fully embracing an ICHRA at this time.

From shopping for a plan to enrollment, payment processes to compliance and ongoing support, employees are raising their hands for assistance — highlighting the opportunity for financial professionals to provide additional education and guidance.

3. The ICHRA market is changing rapidly.

The HRA Council's 2023 Growth Trends for ICHRA & QSEHRA report found rapid growth (144%) in larger businesses adopting ICHRA.

Overall, the number of employers adopting ICHRA grew 64% between 2022 and 2023.

Also of note, ICHRA is bringing younger workers into individual marketplaces.

This is new territory for both employers and employees, so learning along with them and providing sound financial counsel will go a long way.

It's important to stay informed as more employers explore alternative health benefits solutions like ICHRA in the years ahead, and as your clients' needs continue to evolve with the market.

Andrew Reeves is the senior vice president and general manager of Gravie ICHRA, an ICHRA services provider.