Good thing there's not an allowance cap on individual coverage health reimbursement arrangements – as employers on average are offering more in these new accounts than the caps set on small employer health reimbursement arrangements, according to PeopleKeep's report, "What we learned in the first 90 days of the individual coverage HRA."

Since the new accounts became available on January 1, employers have offered an average of $5,971 ($743 per month) to single employees, and $12,892 ($1,074 per month) to employees with a family, according to the report. That is more than 1.8x the average allowance offering for single employees using the QSEHRA in 2019, and 2.6x the average allowance for employees with a family.

In 2020, employers offering the QSEHRA are restricted to offering single employees $5,250 per year ($437.50 per month). For employees with a family, employers are restricted to $10,600 ($883.33 per month). ICHRA users, on the other hand, are able to set whatever allowance they like and offer it to specified employee classes.

"This report demonstrates that employers are not only willing, but prefer to offer more than the allowance limits that the government sets for the QSEHRA," says PeopleKeep's CEO Victoria Hodgkins.

The analysis also found that within the first 90 days, 48 percent of employers opted for the premium-only ICHRA, and 52 percent chose to also cover out-of-pocket expenses. Employers offering the premium-only ICHRA offered an average annual allowance of $5,544 ($462 per month) to workers, while employers offering the premium-plus ICHRA offered $17,292 per year ($1,441 per month).

In both options, the average employee has enough ICHRA allowance to exceed the nationwide average premium cost for individual health insurance — $5,280 per year ($440 per month) for individuals and $14,016 per year ($1,168 per month) for families, according to the report.

Other key findings include:

"Micro" employers with only a few employees in a certain class offer a much higher allowance than larger employers.
While workers have the chance within the first 90 days to opt-out of the benefit to use premium tax credits instead, PeopleKeep's analysis found that 75 percent of all employees who are offered the ICHRA remain opted into the benefit. In contrast, the minimum required opt-in rate for group health insurance is 70 percent.
In the first 90 days, the most commonly used employee classes are full-time salaried; full-time; and salaried. There is also a strong interest in creating an employee class for workers in a different state than the main headquarters where workers often have a group health plan that doesn't extend well to the new satellite office location.
The most common out-of-pocket expenses submitted for reimbursement were: prescription drugs (61 percent of submitted expenses); medical office visits (13 percent); and chiropractic care (5 percent).

"Hundreds of employers throughout the United States are now offering the brand new benefit through PeopleKeep, and employees are engaging at a high rate," says Hodgkins. "Looking ahead, we are confident that engagement will only increase as employees understand the health benefit better. And although there is room to improve some of the regulatory issues, such as the 90-day advance notice requirement, the ICHRA has some good early traction and can only get better."

Read more:

Instant Insights /

Three months in to ICHRAs: What the data says

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