Switching from a traditional group health plan to an individual coverage health reimbursement arrangement (ICHRA) has many advantages. The ICHRA offers flexibility, predictable cost control, and personalized coverage for employers and employees. But for brokers and benefit consultants, introducing the ICHRA to clients can present difficult hurdles.
Clients may resist switching to ICHRA because they fear switching to a new benefit, worry about employee usage, feel uncertain about the individual market, or have other reasons. However, with the insights in this article, you can overcome these pain points.
Below, we’ll list frequent objections clients have to the ICHRA. We’ll also suggest solutions that brokers can use to help employers see the potential of this innovative health benefit.
In this blog post, you’ll learn:
An ICHRA allows employers of all sizes and industries to offer health benefits without the complexity and cost of a traditional group plan. With an ICHRA, your clients provide tax-free funds that their employees can use to pay for their own individual health insurance plans. This flexibility gives your clients’ staff more choices while keeping their benefits budgets in check.
Here’s how it works: The employer sets a fixed monthly allowance that their W-2 employees can use to buy individual healthcare coverage. There are no minimum or maximum contribution limits. So, employers can decide how much to offer based on their company’s business goals. At the plan year’s end, they can review and adjust their allowance amount as needed.
Eligible employees will then use their pre-tax dollars to buy individual health insurance coverage on a public or private exchange. They can choose the affordable coverage that fits their needs, whether a self-only or family plan. As long as they choose a qualified health plan, they can participate in the ICHRA. Their legal dependents can also use the ICHRA if your client designs their benefit to allow them, and each dependent has proper health coverage.
Any business owner can offer the benefit if they have at least one W-2 employee. If your client’s company is an applicable large employer (ALE), offering an affordable ICHRA allowance can help them satisfy the Affordable Care Act’s (ACA) employer mandate.
Even though the ICHRA is rising in popularity and can solve many problems your clients face, many employers are still unfamiliar with it. Immediately addressing concerns is vital to putting your clients’ minds at ease and ensuring a smooth transition. Let’s go over a few hesitations in the sections below.
Most mid-size or large employers are familiar with managing a traditional group plan. Each year, they select or renew a fully-insured group plan (or set up a self-funded plan), notify employees of open enrollment, automate payroll deductions, and work with their carrier when it’s time to renew.
But the ICHRA relies on defined employer contributions and employees choosing their health plans. This change can feel overwhelming, especially for small teams with limited benefit management resources.
The solution:
Remodel Health can help your clients manage their ICHRA quickly and easily. Brokers and employers receive white-glove support, making the move from other coverage to the ICHRA pain-free. We also help onboard clients’ employees to ensure they understand their new benefits and how an ICHRA can support their unique needs.
Most health insurance plans have a set calendar-year deductible. But offering a new health benefit, like the ICHRA, mid-year triggers a special enrollment period so employees can drop group coverage and choose an individual plan. This means an employee’s group plan deductible payments won’t carry over when they switch to an individual plan mid-year under an ICHRA.
This issue can be frustrating for employees who have paid for many medical expenses at the beginning of the year. If they have to restart their deductible from scratch, it could lead to significant financial hardship.
The solution:
While a mid-year ICHRA launch is possible, it’s best to avoid it to minimize employee disruption. When you partner with Remodel Health, we’ll work with you and your client to craft the best benefit strategy possible. This will help you choose the right benefit start date and ease your employees’ financial transition to individual health insurance coverage.
HR is usually the central hub for employee benefits questions about traditional group health insurance. They’re at the frontlines for employees asking about coverage options, enrollment, and insurers. This level of involvement is convenient for employees and often positively impacts benefit engagement.
With the ICHRA, most administration and resources will come from a TPA or HRA software. That can leave HR teams feeling lost when employees ask for help. They may also worry about losing control as they no longer directly support their teams.
The solution:
An ICHRA platform like Remodel Health can help your clients support their employees through education, enrollment, plan shopping, and attestation. This can relieve some administrative processes and give your HR team more time to focus on other priorities.
Your clients’ employees are likely used to having their employer choose their health benefits plan. In turn, they may feel frustrated by selecting a health plan on the individual market, especially if it’s their first time. Clients may also worry that the individual marketplace may not have enough plan or provider choices to support their employees’ medical needs.
The solution:
At Remodel Health, our benefits advisors can help your clients’ employees understand their options and shop for individual health plans from our dashboard. This personalized approach empowers employees to take greater control over their coverage and health outcomes.
Most employers use various HR and benefits administration systems to track enrollments, payroll, compliance, and more. Traditional group health plans coordinate with these systems easily. But the ICHRA often uses a separate platform or TPA that may not integrate with the employer’s other applications. Using multiple systems can lead to frustration and inefficiencies.
The solution:
While there may be initial setup friction, the ICHRA can reduce ongoing admin tasks in the long run. Plus, with the right ICHRA software tool, many tasks can run smoothly and quickly, even if they don’t integrate with other platforms.
Switching from a group health plan to a new health benefit model can feel daunting. Employees who are used to traditional employer-sponsored coverage may feel like the ICHRA is too difficult to understand. Employers may think it will bring more administrative work and compliance risks.
The solution:
While the ICHRA can initially seem complicated, it’s manageable when employers have the right tools, partners, and communication strategy. When you partner with Remodel Health, we help employers design their benefits to relieve confusion about how they work. We also host an employee kickoff call to ensure the staff understands the new benefit and can ask questions.
Even though the ICHRA offers greater flexibility, the strength and reliability of the individual market can make employers hesitate. Your client may worry that there won’t be enough health insurance options, premiums will be expensive, or the coverage won’t be good enough. These concerns can make employers feel that the ICHRA brings too much uncertainty for employees.
The solution:
Today’s individual market is more competitive than ever. Addressing your clients’ fears with recent data and a strong ICHRA design will help them see the ICHRA as an attractive option.
Group health insurance has been the most popular health benefit option for decades. Even if employers see the long-term advantages of the ICHRA, it can be tough to make a change. Many employers have offered group health insurance for years and are familiar with how it works. They may view switching to the ICHRA as a hassle without a good reason.
The solution:
Sometimes, the best way to convince a client is to share examples of similar-sized companies or industries that made the switch successfully.
See how our customers transformed their health benefits in our case studies!
Like other health benefits, the ICHRA must follow specific federal laws, such as the ACA, ERISA, HIPAA, IRS rules, and COBRA. While group plans also have compliance requirements, insurance companies or plan administrators handle most of the responsibilities. Tackling these regulatory requirements alone can make clients feel the ICHRA is too risky.
The solution:
ICHRA compliance doesn’t have to be intimidating. Remodel Health’s ICHRA+ product has pre-set regulatory updates so your clients can stay compliant while minimizing legal stress. We help with plan documents, benefit notices, providing information for Forms 1094 and 1095, and more.
Most job seekers view traditional group plans as a key selling point in a job offer. They’re familiar with carrier names, premium contributions, and payroll deductions. Employers may worry that going with an unfamiliar health benefit could turn off prospective hires or frustrate current employees.
The solution:
The ICHRA is a modern and cost-effective approach to healthcare benefits. However, your clients may be hesitant at first. Many of these concerns are due to their unfamiliarity with the ICHRA. But by working closely with your clients and providing the proper education and resources, you can help them see the ICHRA as the right benefit for them and their employees.
Remodel Health’s ICHRA+® solution makes it simple for every employer to offer a personalized health benefit. We work with you to help you offer your clients an attractive health benefit at a budget that works best for them. Plus, our expert support team guides employers and employees every step of the way, so they don’t have to navigate a new benefit alone.
If you’re ready to set your client up with an ICHRA, contact us, and we’ll get you started!