As ICHRAs continue to be part of conversations around employee benefit solutions, the line between reality and fiction can blur. Misconceptions towards ICHRAs can be seeded and grown until they become the norm, rather than the exception.
These misconceptions can lead to ill-informed decisions when weighing the appropriateness of an ICHRA for employer-sponsored health coverage.
We will address some of the more common misconceptions below and provide clear and unbiased information, which will aid decision makers in providing the best possible benefits solution for employers.
Misconception #1: “An ICHRA is the same as traditional group insurance.”
Reality: Some believe that an ICHRA works similarly to traditional group health insurance. While an ICHRA plan is technically a group plan, it is fundamentally different from a traditional group plan. ICHRAs provide employer contributions for employees to purchase Individual health coverage, while traditional group insurance provides coverage directly.
Misconception #2: “ICHRAs are only available to full time employees of large employers.”
Reality: ICHRAs are designed for employers of all sizes, even the smallest employer groups. There are no minimum group size requirements for employers to offer an ICHRA. Likewise, there are no minimum participation requirements for employers to offer an ICHRA.
Further, an ICHRA can be made available to part-time or seasonal workers if certain eligibility provisions are met.
Misconception #3: “Employees will have to fend for themselves in an ICHRA.”
Reality: While an ICHRA requires employees to find health coverage on an Individual Marketplace, they will NOT be taking this journey alone.
Bavvy offers licensed enrollment specialists in the Marketplace who are available during Open Enrollment to help the employee select the most suitable plan of coverage, as well as assist in the application and payment process.
Additionally, Bavvy’s customer success team is available throughout the plan year, providing employee communications and answering any questions.
Lastly, the employee’s elected carrier will also have customer support resources to answer any coverage or payment questions. These channels of support should give employees a sense of well-being in knowing, “I am not alone”.
Misconception #4: “Some employees will be worse off financially than others in an ICHRA.”
Reality: Under ACA affordability requirements, any large employer must provide an ICHRA contribution that is sufficient to make health insurance affordable to their employees.
This definition of affordability is set at a level that results in employees not having to pay more than a set percentage of their annual salary for a minimum prescribed health plan.
Because ACA premiums can vary, along with employees’ salaries, this can give the illusion of inequity when some employees must pay a higher or lower dollar contribution than others for the same plan.
However, when looking at affordability from the correct basis, the rule holds: NO employee will ever pay more than a uniformly prescribed percent of their annual salary for a uniformly prescribed level of coverage.
Final Remarks
ICHRAs need to be part of the discussion when employers are making the optimal decision for their employees’ health plan solution. It is critical to be aware of the realities surrounding ICHRAs, and to consult with a trusted benefits advisor that can navigate these misconceptions to arrive at the most appropriate decision for all.