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:
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:
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.
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.
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.
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.
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.
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.
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.
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:
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.
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!