If you’re considering the Individual Coverage Health Reimbursement Arrangement (ICHRA) for your organization, you might be wondering how to determine the right contribution amount for your employees.
In this blog post, we’ll help you crack the ICHRA code and find the perfect balance for your team. If you’re new to ICHRA, check out our previous blog post, What is ICHRA and how does it work?
Ready to dive in? Let’s explore the factors to consider when setting your ICHRA contribution amounts for employees.
Factor 1: Employee Classes
One of the key features of ICHRA is the ability to create different classes of employees, such as full-time, part-time, seasonal, or based on geographic location. By establishing employee classes, you can offer varying levels of reimbursement, tailoring the contribution amounts to suit the needs of each class.
Factor 2: Budget Constraints
As an employer, it’s essential to balance the needs of your employees with the financial constraints of your organization. When determining ICHRA contribution amounts, consider your overall healthcare budget and how it aligns with your business goals. Keep in mind that with ICHRA, there is no maximum limit on employer contributions, but you must establish a cap on annual reimbursements for each employee class.
Factor 3: Cost of Individual Health Insurance Policies
To ensure your employees can afford individual health insurance policies with the ICHRA contribution amount, research the average cost of policies in your area. The cost of individual policies can vary significantly based on factors such as location, age, and coverage level. By considering the cost of individual policies, you can better tailor your ICHRA contributions to meet the needs of your employees.
Factor 4: Competitive Benefits
Offering competitive benefits is crucial for attracting and retaining top talent. When determining ICHRA contribution amounts, consider how your organization’s healthcare benefits compare to those offered by competitors in your industry. To stay competitive, you may need to adjust your ICHRA contributions to align with industry standards or even exceed them.
Factor 5: Employee Feedback
Your employees are the best source of information when it comes to their healthcare needs. Gather feedback from your team to better understand their preferences, needs, and concerns. By taking employee feedback into account, you can establish ICHRA contribution amounts that genuinely address the needs of your workforce.
Determining the right ICHRA contribution amount for your employees involves considering factors such as employee classes, budget constraints, the cost of individual health insurance policies, competitive benefits, and employee feedback. By carefully weighing these factors, you can create a balanced ICHRA plan that benefits both your employees and your organization.
As always, it’s a good idea to consult with a qualified benefits consultant when setting up your ICHRA plan to ensure you’re making the best decisions for your organization.
Talk to a licensed benefits expert at Remodel Health and see how our ICHRA products could work for your organization!
Important Notice: Remodel Health does not intend to provide specific insurance, legal, or tax advice. Remodel Health always recommends consulting with your own professional representation to properly evaluate the information presented and its appropriate application to your particular situation.