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In the United States, it's long been commonplace for employers to offer a single health plan to all employees. Now, some companies are taking advantage of a new tool that offers more flexibility to workers. Individual Coverage Health Reimbursement Arrangements, or ICHRAs, offer employees a set budget for premiums or health care costs, allowing employees to pick the health care plan that works best for them.
Now, new research from PeopleKeep, a health insurance software company, finds that usage of ICHRAs is on the rise. Moreover, employers who take advantage of ICHRAs offer their employees more funding than is necessary to purchase a self-only gold plan. According to the research, employees received an average allowance of $981 for a single employee in the past year. That figure sits 11% higher than last year's average and is more than twice as much as the $462 currently needed to buy the lowest-cost Marketplace gold standard plan.
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The report notes that ICHRA employers offer significantly more than the ESEHRA allowance caps. For instance, for a single employee, the ESEHRA allowance cap is only $454.16.
Employees receive even more funding when their employers use premium-plus plans. In addition to covering premium costs, these plans allow employees to use their ICHRAs to cover certain out-of-pocket expenses. Some 82% of employers who use ICHRAs use premium-plus plans, which have an average monthly allowance of $1301, compared to only $994 in premium-only plans.
Victoria Glickman Hodgkins, the PeopleKeep CEO, says in a press release that ICHRAS are good for both employers and employees. "Personalized health care benefits that allow the employee to make their own choice of plan based on a set budget are a win-win for small to midsize organizations and their employees," she says. "Companies are seeing the financial and competitive benefits of placing health care purchasing power in the hands of their employees, rather than picking a plan – or, at best, a few plans – that don't fit the needs of all of their workers."
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