In today’s labor market, many business owners feel the strain of rising medical expenses and rigid group health insurance options. To remedy this, employers seek more flexible, cost-effective ways to offer health benefits without sacrificing quality or employee satisfaction. Transitioning from a traditional group health plan to an individual coverage health reimbursement arrangement (ICHRA) offers greater flexibility, cost control, and personalized coverage. But brokers must guide their clients through the transition so they don’t disrupt their employees’ coverage or create confusion. Let’s look at the steps you’ll need to follow to guide them through the entire process.
In this blog post, you’ll learn:
- How group health insurance and the ICHRA differ for employers and employees.
- The step-by-step transition process from an employer-sponsored group health plan to an ICHRA.
- How Remodel Health can simplify the ICHRA transition process.
Want to learn more about the ICHRA? Get everything you need to know about this personalized health benefit in our guide.
How does group health insurance compare to the ICHRA?
Traditional group health insurance is a plan type employers offer employees at a reduced premium rate. Employers and employees enrolled in the plan split a fixed premium price, which they pay to a group health insurance carrier to maintain coverage. In return, the insurance provider pays the cost of the employees’ eligible medical claims.
Alternatively, employers can offer a self-funded group plan where they directly pay for employees’ medical expenses instead of working with a carrier.
In contrast, the ICHRA is an alternative to traditional group health plans. With this stand-alone benefit, employers give employees a set amount of tax-free money to pay for their individual health insurance premiums. The ICHRA offers employers and employees a modern approach to health benefits packages.
Here are some other ways traditional plans differ from the ICHRA:
- Financial burden. Employers with a group health plan must pay an insurer their part of the monthly premium. Additionally, group plans are prone to annual rate hikes. With an ICHRA, employers avoid rate hikes by not working with an insurer and setting their preferred allowance amount. The ICHRA also has no employer contribution limits. So, business owners can offer as little or as much monthly allowance as they choose. However, applicable large employers (ALEs) will want to offer an affordable allowance to satisfy the ACA’s employer mandate.
- Employee flexibility. Group health insurance can have limited plan options that may not meet every employee’s needs. The ICHRA allows employees to shop for individual health insurance plans that best support their healthcare goals and budget.
- Portability. Group health plans are employer-sponsored. This means that employees lose health insurance coverage if they leave their jobs. Individual health plans aren’t employment-based. If an employee with an ICHRA quits their job, they can keep their plan and pay the health insurance premium costs on their own.
- Personalized plan choices. Traditional group plans use a one-size-fits-all approach to plan design. With ICHRA, employees can select the individual plan that supports their unique needs. Employers can personalize the benefit by varying allowances and eligibility by employee classes, family status, and age.
- Administration. Enrolling in group coverage requires employers to take on many administrative tasks. These include negotiating with insurers and managing the plan renewal process. With an ICHRA, employers can end the hassle of managing a group plan and working with an insurer. Plus, they can use a third-party administrator (TPA) or HRA administration solution like Remodel Health to manage their ICHRA and save time.
What steps must I take to transition my clients from traditional group coverage to an ICHRA?
Making the switch from group health coverage to an ICHRA requires careful planning. Luckily, brokers have significant knowledge of the health insurance market. So, their clients are set up for success. But if you’re new to the ICHRA, you may still wonder how to get started. Below is a step-by-step guide that you can use to tackle the transition process with ease.
1. Determine if the ICHRA is a good fit
First, you must decide whether the ICHRA might make sense for your client. Consider their company size, workforce demographics, healthcare budget, and long-term business goals. For example, if your client’s business is becoming a multi-state company, an ICHRA would be a good choice. This is because it can support every W-2 U.S. employee, regardless of location.
Also, be sure they understand how ICHRA differs from group health insurance plans. The ICHRA has different ACA affordability standards, compliance obligations, and reporting requirements. While the ICHRA has several advantages over group plans, speak with your client to ensure they’re ready to switch to this coverage option.
2. Reach out to Remodel Health for a personalized quote and additional education
At Remodel Health, we have all the resources you need to gain a deeper understanding of ICHRAs and how they can help your clients. We can put together a personalized quote for your clients to determine if the ICHRA is a good fit.
After you submit an employee census, a summary of benefits, and the current total annual spend, we’ll prepare a personalized ICHRA quote proposal. We perform a complete analysis of your client’s current benefits compared to the plan design options with an ICHRA.
3. Cancel their group plan
Once you and your client have decided on an ICHRA, contact your client’s group health insurance company to cancel their plan. Most insurance providers allow you to cancel a group plan anytime during the year. But, some charge a penalty for canceling before the plan year ends. So, check your client’s plan documents before doing so. To be sure you have time to set up and implement the ICHRA, pick a cancellation date at least 90 days before the benefit begins.
You should also ask the insurer to provide your employees documentation showing loss of health coverage. Losing coverage is a qualifying event that triggers a special enrollment period. Employees should have the documentation in case they need proof of eligibility.
4. Help them design their ICHRA
Next, you’ll need to help your client design their new ICHRA benefit. The first step is choosing the plan’s start date and drafting the necessary legal plan documents. You and your client must also review their budget so you can set the right ICHRA allowance amount.
Lastly, you can decide to vary eligibility requirements and monthly allowances using employee classes and limit the list of eligible medical expenses. When partnering with Remodel Health, our expert team and innovative software will guide you and your client through the design process.
5. Review your client’s compliance obligations
Like all health benefit plans, it’s vital not to overlook the ICHRA’s compliance regulations. If your client is an applicable large employer (ALE), they’re subject to the employer mandate. They must offer affordable health insurance with minimum essential coverage (MEC) and minimum value to at least 95% of their full-time employees and dependents. The ICHRA can satisfy the mandate if it meets the affordability standards.
Additionally, the ICHRA must adhere to ERISA, HIPAA, and COBRA regulations. Eligible employees should generally receive a 90-day notice before the ICHRA’s plan year begins. Your client must also fulfill specific reporting requirements at the end of the year. Creating a checklist for your clients may be helpful so they don’t miss any compliance deadlines. When partnering with Remodel Health, we’ll help you and your clients with ICHRA compliance.
6. Communicate with the employees
Change is often stressful, especially for employees familiar with traditional group plans. Even though your client’s employees receive their ICHRA notice before the benefit starts, many haven’t heard of an HRA before. So, it’s vital to speak with them about how ICHRA works and when the change will occur.
Create an employee communication strategy with your client. Highlight the advantages of the ICHRA and how it compares to group health coverage so you can address early concerns. You should also inform them that they’ll have a 60-day window to choose a health insurance plan once their employer offers them the benefit.
If your employees have as much information as possible, they can better navigate the benefit with less frustration.
Remodel Health can help onboard and educate your client’s employees. This ensures employees understand their benefits and how an ICHRA with Remodel Health works.
7. Help employees shop for individual health insurance coverage
Once added to the benefit, employees may need help shopping for an individual health plan—especially if it’s their first time. This is where your expertise in the health insurance market can shine.
Employees must have a qualified form of individual health coverage to use the ICHRA. So, provide resources to help employees compare and enroll in an ACA-qualified plan. Explain the difference between public and private exchanges, including premium tax credit eligibility. You should be able to answer questions on plan types, metal tiers, and provider networks.
You’ll also need to ensure employees know they can opt in or out of the ICHRA benefit based on affordability. If they opt out of the ICHRA and their benefit is affordable, they won’t be able to receive their premium tax credits.
When you partner with us, we’ll help your client’s employees understand their options and shop for individual health plans right from our software. Benefits advisors are also available to assist employees.
8. Create a system for processing payments
Next, you must establish a system for verifying employees’ individual health insurance coverage and processing premium payments. This step helps clients comply with IRS medical claim substantiation regulations.
A TPA or HRA software like Remodel Health can help streamline enrollment, payment management, and attestation. These tools can also relieve some of the administrative burden on you and your client.
9. Offer your ongoing support
Finally, ongoing support is essential to your client’s success with the ICHRA. Throughout the plan year, help your client track benefit usage, conduct satisfaction surveys, and address employer and employee concerns.
You should also help your client review the benefit when it’s time for renewal. If necessary, you can change the benefit design and allowance limits. Employees may also need guidance changing their healthcare plans during Open Enrollment Period.
The more of an ICHRA expert you become, the better equipped you’ll be to support your clients with this type of comprehensive coverage.
How Remodel Health can help your clients transition to the ICHRA
As you can see, there are many steps you must take to ensure your clients transition to the ICHRA is done smoothly and compliantly. The process can be long and complex, especially if the ICHRA is new to you. That’s where Remodel Health can help.
Remodel Health has years of experience helping brokers leverage ICHRA to help their clients overcome health benefits challenges. With our intuitive ICHRA+® product and comprehensive customer service offering, brokers, employers, and employees receive individualized support that makes the transition process more seamless.
First, we work with you and your client to understand your needs and business goals. That allows us to craft the best benefit strategy possible. Once we’ve finalized your client’s ICHRA design, our team prepares key launch materials, including any necessary legal documentation and employee notices.
We then host an employee kickoff call to ensure the staff understands the new ICHRA benefit and can ask questions. Our experts use a white-glove approach and can help employees shop for individual health insurance policies.
At Remodel Health, we’re not only here for you during the ICHRA setup and onboarding process. We offer year-round customer support to guide your clients through whatever health benefit hurdles may come their way.
Conclusion
Moving from group health insurance to an ICHRA may seem challenging at first. But with the right approach, it’s an excellent opportunity to provide your clients with a tailored health benefit. By following our step-by-step guide, you can get your client through the transition with minimal fuss.
Are you hesitant to handle the switch on your own? We’re here to help! At Remodel Health, we’re excited to help your client offer an ICHRA at their company. Chat with us today, and we’ll help your client provide their employees with an affordable and attractive health benefit.
Complete our ICHRA Academy program to get certified on the benefit and be better equipped to assist your clients!