In 2020, employers gained the Individual Coverage Health Reimbursement Arrangement (ICHRA) option to meet ACA obligations and avoid penalties.
Before recent government guidance, employers could only meet their Affordable Care Act (ACA) obligations and avoid penalties by sponsoring a traditional group health plan.
All this changed in 2020 with the new individual coverage health reimbursement arrangement (ICHRA) option.
An ICHRA offers employers an effective alternative to the traditional way of providing health insurance to employees. Instead of offering a one-size-fits-all group plan, employers can now provide tax-free funding for all or specific segments of their employees to purchase health insurance that best meets their needs.
This approach eliminates claim risk, provides cost predictability, and reduces administration for employers, allowing employees to select from a broader range of ACA health insurance options for themselves and their families.
Employers are looking for ways to address the rising cost and administrative burden of providing healthcare plans without reducing or eliminating benefits. Group plan premiums continue to rise, sometimes at double-digit rates. Group plans can be complex to support. One-size-fits-all group benefit packages don’t sufficiently address each individual’s healthcare needs.
By offering an ICHRA, you can:
- Eliminate claim risk and cost unpredictability
- Reduce the administrative burden of designing and managing a group health plan
- Empower employees to select from a wide array of portable ACA-governed individual health plans
- Meet your ACA employer mandate responsibilities, thus avoiding those ACA penalties.