2019 was the year we all were introduced to an expansion ruling for Health Reimbursements Arrangements or HRA. Introducing Individual Coverage HRA plans, or ICHRAs, would be exciting and eye-opening for some, while others would be skeptical or the plans were not even on their radars.
Flyte examines ICHRA’s initial predictions, myths, and game-changing growth trends, showing that ICHRA is not just a flash in the pan.
Individual Coverage HRA Predictions
The Departments of the Treasury, Labor, and Health & Human Services jointly worked on this ruling and gave some noteworthy predictions. Based on the Department’s assessments of the final ICHRA rule made in June 2019, they projected that up to 800,000 employers could choose to provide these alternatives.
ICHRA was estimated to impact approximately 11 million employees and their families positively. Furthermore, government estimations suggested that around 800,000 individuals previously without health insurance might gain access to ACA-compliant individual policies because of these changes.
The Individual Coverage HRA opened the ability for employers of all sizes to get out of health care decision-making for their employees. Here, we explore ICHRA’s myths and the trajectory of Health Reimbursement Arrangements since its inception.
Individual Coverage HRA – 5 Myths
Many have speculated about the longevity and viability of ICHRA as an employee benefit. Fast forward four years, and we have found that many of these assumptions are false, and the Departments were on to something with their projections.
Myth #1: “Individual Coverage Health Reimbursement Arrangements (ICHRAs) are intended to weaken the quality of benefits that employees receive from their employers.”
Early data from initial adopters of ICHRAs suggests that the ruling attracts enrollees who are generally younger than traditional ACA enrollees, thereby improving the overall stability of the individual market. The ICHRA rules balance providing employers with flexibility and implementing safeguards to protect the individual market from adverse selection.
Myth #2: “Employees in an ICHRA plan would no longer receive quality group health coverage. Instead, they would be given a stipend and forced to find coverage on the Obamacare exchanges.”
It’s important to note that if a traditional group health plan is already effectively meeting the needs of employees, the introduction of ICHRA rules does not necessitate any changes to these arrangements. Nevertheless, individual market plans may become more appealing to specific employees, particularly in regions or states where premiums are lower.
Myth #3: “Health insurance on the exchanges covers less and is more expensive.”
ICHRA Federal regulations dictate that individual market coverage must encompass a comprehensive set of essential health benefits in ten specific areas.
ICHRAs are voluntary options that empower employers to reimburse employees for premiums associated with ACA-compliant individual market coverage of their choice.
Exchange insurance rates vary by State whereas individual health insurance policies rival small-group pricing in more competitive health exchange markets.
Myth #4: “The possibility that employers could push sicker employees onto exchanges would also make those exchanges more expensive for everyone.”
The Departments of Health and Human Services, Labor, and the Treasury have thoughtfully structured ICHRA rules to prevent the redirection of high-claim employees into the individual market. This regulation enhances the individual health insurance market and encourages increased participation from insurers.
Myth #5: “The ICHRA system allows division of workers into classes by their employers, with some receiving traditional job-based coverage and others pushed out into the individual market.”
The Departments set up the classification of employees to align with the Department of Labor standards, eliminating the ability to have selective job-based classifications seen in Traditional Group Health Insurance.
HRA Growth Trends
In 2022, Flyte became a founding member of the HRA Council, a non-partisan advocacy organization dedicated to improving and expanding health coverage options for millions of workers. The Council is comprised of health insurance leaders, brokers, administrators, insurers, support organizations, and employers.
Together Flyte and HRA Council leaders have seen some fantastic growth trends published earlier this year.
The number of American workers offered an ICHRA grew 171% between 2022 and 2023.
- Not to mention 61% of employees enrolled in a Marketplace plan via ICHRA or QSEHRA for the 2023 benefit year are 44 or younger.
- Marketplace health plan selections funded by ICHRA are split evenly between Gold, Silver, and Bronze tiers.
- Applicable Large Employers (ALE) of 50 or more full-time employees have seen tremendous adoption of ICHRA, with a 144% growth.
The 2024 renewal and benefits season shows no signs of a slowdown with the adoption of ICHRA as a viable employee benefit. It proves that ICHRA is more than just a flash in the pan for employers new to benefits or those looking to switch from traditional group plans. Employers of all sizes realize that not only is ICHRA an affordable option for offering Health Insurance Benefits but also a bridge to offering other benefits.