When an employer decides to switch from a self-funded health plan to an individual coverage health reimbursement arrangement (ICHRA), it can feel like an uphill battle. For many business owners, it’s the first step toward lower financial burden and more personalized benefits. But they may not know how to get started.
As a broker, your clients rely on you to guide them through this transition with knowledge and confidence. Whether they’re looking to reduce administrative tasks, keep costs down, or give employees more choice in their health coverage, switching to an ICHRA is a great solution. But they must have the tools to tackle the process correctly.
In this article, you’ll learn the steps to make the transition from self-funded health insurance policies to the ICHRA as seamless as possible for your clients and their employees.
In this blog post, you’ll learn:
- How an ICHRA compares to a self-funded health plan and how it can be a wise choice for employers.
- The step-by-step process to transition your clients from a self-funded plan to an ICHRA.
- How Remodel Health can simplify the transition process for employers and employees.
Do you have a client looking to switch from traditional group health insurance to the ICHRA? Read our blog to learn the steps you need to take to help them.
How does self-funded health insurance coverage compare to the ICHRA?
With a self-funded health plan, employers control the entire process of offering their employees’ health coverage. This method can be more flexible than other options because employers can design their own plan. But it also comes with significant financial risk and administrative skill.
Instead of paying a premium to a health insurance company to manage the plan, self-insured employers are responsible for setting aside funds to pay their employees’ medical claims directly.
Many employers hire a third-party administrator (TPA) to process claims and handle compliance tasks to lighten the administrative burden. They can even buy stop-loss coverage to help lessen their financial risk. But even with a TPA or additional coverage, self-insured plans still need a large cash reserve to cover unpredictable health claim expenses.
The ICHRA provides a more straightforward and cost-predictable solution. Instead of managing medical claims, employers offer eligible employees a tax-free monthly allowance that they can use to buy individual health coverage. This strategy gives employees more agency over their health and removes the burden of managing a self-funded group plan from the employer.
Here are a few other ways in which the ICHRA stands out compared to traditional self-funded solutions:
- With an ICHRA, employers set a fixed allowance, meaning there are no surprise rate hikes during renewal periods. There are also no annual employee contribution limits, so businesses can tailor the benefit to fit their budget.
- Because the employee owns their individual health insurance plan, they can keep their coverage even if they leave the company. This is in contrast to self-funded group plans, which require continued employment.
- For extra flexibility and customization, business owners can vary ICHRA eligibility and contribution amounts based on employee class, age, or family size.
- Instead of relying on a TPA or an insurance company, brokers can recommend ICHRA administration solutions, like Remodel Health, which can simplify ICHRA compliance, tracking, and support.
What steps must I take to transition my clients from a self-funded health insurance policy to an ICHRA?
Making the switch from a self-insured policy to an ICHRA can be tricky. Luckily, the following step-by-step guide will help you assist your clients through the process as easily as possible. You can also contact us at Remodel Health, and we’ll handle the heavy lifting.
1. Assess your client’s current plan and goals
Before they move from a self-insured plan to an ICHRA, take a step back and look at your client’s current health benefit. What are the pain points of their self-funded plan? Are they seeking more cost predictability, fewer administrative headaches, or greater employee satisfaction? Understanding the “why” helps determine if the ICHRA is the right solution.
If your client is still on the fence, help them consider their business goals. Are they trying to simplify operations, provide more options for employees, or reduce healthcare costs? Reviewing company size, workforce composition, and budget will help you design the ICHRA and lay the foundation for a smooth transition.
2. Make a plan for cancelling the self-funded policy
If your client decides to move forward with an ICHRA, you’ll need an offboarding plan for their existing health coverage. Work with them to coordinate the termination of the self-funded plan, including closing out the contract with their TPA and paying out any outstanding medical claims.
Next, give employees advance notice that their current plan is ending. You should provide them with formal documentation confirming their loss of coverage, which they may need to provide eligibility for a special enrollment period to shop for an individual health plan. This step ensures there are no coverage gaps or compliance issues during the transition.
3. Help your client design a compliant ICHRA
Now you can help them design their new ICHRA benefit. Start by selecting an effective date and drafting the required legal plan documents. From there, help your client determine a budget-friendly monthly allowance that supports their staff’s needs. Tip: Remodel Health does this for you!
You can customize the ICHRA by setting different allowances or eligibility for various employee classes, such as full-time and part-time, salaried and hourly, or geographic location. You should also help your client establish an attestation process to verify that employees maintain qualified individual coverage to use the benefit according to IRS substantiation rules.
The last part of benefit design is compliance. If your client is an applicable large employer (ALE), their ICHRA must meet ACA affordability requirements to satisfy the employer mandate. You can use affordability calculations and IRS safe harbors to help your client avoid penalties. The ICHRA must also follow ERISA, HIPAA, and COBRA health insurance regulations.
Suppose designing the ICHRA is too big an undertaking to handle alone. In that case, Remodel Health can help you through it every step of the way. From plan design and affordability to payment management and compliance, we’ll ensure your client’s new ICHRA is a success.
4. Prepare and educate employees
Your client’s employees will determine the success of the ICHRA rollout, so preparing them early is vital. It’s best practice to give employees 90 days’ advance notice before the ICHRA begins. But if you want to be proactive, start educating them before that deadline.
You can help your client build a clear communication plan introducing the ICHRA and explaining key terminology they’ll need to know, like allowance and attestation. Also, inform them they’ll have a 60-day special enrollment window to select an individual health plan and show them how to submit premium payment requests.
Hosting educational sessions, creating resources like FAQs, and offering individual support make a big difference. Remodel Health supports this phase by helping onboard plan participants, answering questions, and ensuring everyone understands their new healthcare benefits. When employees feel confident and informed, the transition goes much smoother.
5. Help participating employees shop for individual health coverage
If your client’s employees are only familiar with employer-sponsored health plans, they may be unfamiliar with individual health coverage. So it’s your job to give them a helping hand.
As a broker, you’re in a prime position to assist your clients’ employees as they navigate the individual market. Educate them on comparing and enrolling in ACA-compliant plans on public or private exchanges. Be ready to answer questions about plan types, metal tiers, premium tax credit eligibility, and medical provider networks.
It’s also crucial to explain how opting in or out of the ICHRA works. For example, if an employee declines the ICHRA but their allowance is affordable, they can’t collect insurance premium subsidies. Make sure employees understand their viable options before making a decision.
Remodel Health’s platform makes shopping easier, with built-in plan comparison tools, insurance carrier lists, and licensed benefits advisors available to guide employees through enrollment.
6. Monitor the transition and provide guidance year-round
Once the benefit goes live, stay involved in your client’s new ICHRA to address any challenges. Help troubleshoot, answer questions, and ensure the benefit meets your client’s needs.
Schedule periodic check-ins to track the ICHRA’s effectiveness. Help your clients assess how well the benefit is meeting their goals. You can also encourage them to collect employee feedback and review usage data.
At the end of the plan year, remind your client of detailed reporting and compliance responsibilities and begin discussing plan design changes, such as adjusting allowances and updating employee classes. You may also need to guide covered workers through Open Enrollment if they want to change individual health plans.
By continuing to provide hands-on support throughout the year, you prove your value as a trusted advisor and help ensure your client’s ICHRA remains successful.
How Remodel Health can help your clients transition from a self-funded health plan to the ICHRA
Transitioning your clients from a self-insured group health plan to an ICHRA is a multi-step process that requires careful planning. It can feel overwhelming at first, especially if ICHRA is new for you or your clients. Luckily, Remodel Health is ready to partner with you every step of the way.
With years of expertise in health benefits strategy and a track record of helping brokers better serve their clients, we’re more than equipped to guide you through the entire ICHRA transition. Our ICHRA+® software solution, paired with top-notch broker and customer support, ensures that employers and their teams have the tools they need to succeed throughout the process.
Here’s how an ICHRA with Remodel Health works:
- We’ll first review your client’s current health benefit plan. This will include a detailed comparison of their self-insured health plan with potential ICHRA design options.
- After reviewing their employee demographics, benefits summary, and budget, we’ll present your client with a customized ICHRA proposal.
- Once we’ve completed their ICHRA plan design, we will help with all the necessary preparations to launch the benefit. This includes drafting plan documents and notifying staff members.
- Finally, we’ll lead a kickoff session for employees to guarantee a smooth rollout. We’ll walk them through how the ICHRA works and help them enroll in individual health insurance plans from our platform.
Our support doesn’t stop after the benefit launches. Remodel Health offers year-round customer service to help you and your clients navigate any questions or issues, so you’ll have a positive ICHRA experience from start to finish.
Conclusion
Switching from a self-insured coverage to an ICHRA might seem daunting. But by following our step-by-step guide and offering your continuous support, you’ll be on your way toward helping your clients provide a customized, cost-effective benefits solution that can work for them long-term.
If you need help during the transition, Remodel Health is ready to step in. Let’s work together to provide your clients with a personalized ICHRA that fits their goals and team. Chat with us today to learn how we can help!
Are you anxious to learn more about the ICHRA? Complete our ICHRA Academy to learn everything you need to know to help your clients!