TASC knows the ins and outs of employee benefits, as we’ve been helping employers and employees save money with tax-advantaged benefit plans for over 50 years. It’s what we do! We’ve observed how the healthcare and employee benefits landscape has evolved, with employers seeking ways to offer high-value benefits to their staff without spending a fortune. That’s why we believe the Individual Coverage Health Reimbursement Arrangement (ICHRA) is one of the most underutilized benefit plans available to employers.
It has the potential to overhaul how an employer approaches healthcare benefits, providing cost savings, flexibility, personalized healthcare choices, and more. Still, we see so many employers who aren’t fully aware of the benefits of an ICHRA and how it could work for their organization – so let’s get started!
What Is ICHRA?
An ICHRA is a relatively new option in the world of health benefits, which may be why it has flown under the radar for so many organizations. Introduced in 2020, an ICHRA lets employers reimburse employees for individual health insurance premiums and other qualified medical expenses with tax-advantaged funds. While traditional group health plans offer standardized or rigid plans for eligible employees, ICHRAs allow employees to choose health insurance plans that fit their own circumstances. Employers gain predictable and controlled costs for health benefit contributions, reducing the employer’s overall payout towards group health plans, while employees are empowered to choose the plan they want, making it an exciting and underutilized option for a desirable benefits package.
How Does an ICHRA Work?
With an ICHRA in place, the employer sets a specific budget or monthly allowance for employees to use toward purchasing individual health insurance and/or certain eligible out-of-pocket healthcare expenses. That means funds can be used for health insurance premiums, copayments, deductibles, and prescriptions, depending on how the plan was set up.
Employers have options when choosing how they structure ICHRA contributions. Contribution amounts can be customized based on employee classifications, including full-time, part-time, seasonal, and even based on specific jobs or roles.
When Is ICHRA the Right Option?
Here are some scenarios where an ICHRA could be a great choice for an employer!
- Small to medium-sized business where traditional group plan is too expensive. Sometimes businesses want to help their employees with health insurance solutions, but traditional group health plans are simply too expensive. An ICHRA lets small to medium-sized employers provide funds to support their employees’ individual coverage healthcare premiums and/or expenses without overspending.
- Diverse Staff Needs. Sometimes a business has a staff with highly diverse needs. Some employees have families while others are young and single. Some employees have low healthcare expenses while others have chronic conditions. An ICHRA can be customized to deliver what each class of employee needs.
- Remote and Hybrid Workforce. When companies have remote employees, spread across multiple states, an ICHRA simplifies healthcare offerings and takes the worry out of complying with unique requirements across different states. Employees can choose from the options available in their area.
- Healthcare Options for Seasonal and Non-FTE. With an ICHRA, employers can still provide healthcare reimbursement funds to employees who don’t qualify for their group health plan, such as part-time or seasonal workers.
We know how beneficial ICHRAs can be for employers across the country, and we want everyone to know! It’s a benefit that deserves more attention, and we specialize in helping employers offer cost-effective benefits with maintaining compliance. If you want more information on how TASC ICHRA could work for your organization, request a proposal today!
