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5 Reasons to Choose ICHRA | Ambetter Health Solutions
Five Reasons to Choose ICHRA for Your Business
The individual coverage health reimbursement arrangement (ICHRA) is a relatively new alternative to expensive group health insurance for many types of employers. It’s also a great way for small employers to start offering health insurance, which can help with recruitment and retention.
The way ICHRA works is simple.
- Employers determine a reimbursement amount for their employees.
- The employees then choose their own plan on the Health Insurance Marketplace.
- Employees are free to choose whatever available plan works best for their unique needs.
This type of health insurance option is a growing trend in all 50 states - becoming popular with companies of all types and sizes. Here are five reasons ICHRA plans are great for businesses:
1. Customization
ICHRA plans provide flexibility for employers to tailor their health benefits to meet the specific needs of employee groups. For example, employers can offer varying reimbursement amounts based on employee categories, such as full-time, part-time or seasonal workers. Reimbursements can also be adjusted by age, family size and other factors. Such customizations allow businesses to allocate funds according to specific circumstances, such as those who will likely have more healthcare needs.
In addition, employees can choose from a wide variety of plans to meet their needs and preferences. If they are remote or work out of state, they can select plans in their geographic areas. As an example, an employee can choose a plan that is in-network with a favorite pediatrician or that covers necessary prescription medications.
2. Tax Advantages
Unlike a health insurance stipend, ICHRA reimbursements are tax free. They are not subject to employer tax, payroll tax or income tax. While employers already offering group benefits enjoy these tax advantages, employers new to offering benefits will see those tax savings for the first time. Every little bit helps when it comes to that tax bill.
3. Portability
Unlike traditional group health insurance plans, ICHRA is portable. Employees can maintain their health coverage even if they leave the company. This portability is beneficial for individuals who experience career changes and want to retain their health insurance coverage.
4. Cost Control
Employers have more control over their healthcare costs with ICHRA. Instead of providing a one-size-fits-all group insurance plan with costs that creep up every year, employers set a budget for healthcare benefits and reimburse employees accordingly. This allows for greater predictability in budgeting and can be particularly advantageous for businesses with variable workforces or those facing high turnover.
5. Compliance
ICHRA is designed to comply with the employer mandate of the Affordable Care Act (ACA), which requires employers with more than 50 full-time equivalent employees to offer affordable and minimum essential health coverage. ICHRA enables employers of all sizes to ensure their employees have coverage for pre-existing conditions and the ten essential health benefits.
While ICHRA can be a cost-effective solution for many businesses, employers considering ICHRA should carefully evaluate their workforce, budget constraints, location and desired level of customization to determine if this health reimbursement arrangement aligns with their objectives.
Additionally, employees should carefully review the options available to them to make informed decisions about their health coverage. To ensure success, we recommend choosing a well-established and experienced health reimbursement arrangement administrator to keep up with compliance, reporting, employee enrollment support and ongoing customer support.
Interest in and demand for ICHRA is growing:1
- 64% increase in the number of employers offering ICHRA between 2022 and 2023
- 144% increase in the number of applicable large employers (more than 50 employees) offering ICHRA between 2022 and 2023
- Number of workers offered ICHRAs grew 171% from 2022 to 2023
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About Us
Ambetter Health is the largest carrier of Marketplace insurance in the country,† serving nearly 5 million members. At our core, we believe in providing high-value, low-cost health benefits without compromise.
1. Growth Trends for ICHRA and QSEHRA 2022 to 2023. HRA Council. June 2023.
†Statistical claims and the #1 Marketplace insurance statement are in reference to national on-exchange marketplace membership and based on national Ambetter Health data in conjunction with findings from 2023 Rate Review data from CMS, 2023 State-Level Public Use File from CMS, state insurance regulatory filings, and public financial filings.