“If you have that already and you’re not getting a premium tax credit from the government, it’s really easy — you don’t have to enroll,” O’Neill said. “No more do the employees call the employers about health insurance. You’re out of the game — you call the broker. There’s no need to call your employer anymore.” He went on to explain another major benefit to employers by offering ICHRA instead of traditional health care benefits packages: there’s no longer a need for the employer to shop the vendors and select the plans — and, importantly, have to explain those plans, he said. And if you’re an employee who already has health insurance and is happy with that plan, there’s no need to switch, he continued. John Kelly, founder and CEO of Minneapolis-based health insurance tech startup NexBen, was also at the ACRA virtual meeting. Kelly touted “anywhere from a minimum to 25 to 65% savings” for employers who adopt the ICHRA model.
Brad O’Neill, president of The ICHRA Shop, himself is no stranger to the effects of the “Great Resignation.” He left his role with Fidelity Investments in 2020, “in the middle of the pandemic,” his employee biography on The ICHRA Shop website notes, “to create a new way to Shop, Enroll and Administer health insurance.” Essentially, the ICHRA is to health care benefits packages what the 401(k) became for then-traditional pension retirement plans — that is, an employer offers a matching amount to an employee’s own financial contribution to a plan and then is able to choose to where that combined allocation goes. It’s particularly great for smaller organizations and businesses that otherwise couldn’t afford to offer full health care benefits to staff, proponents who presented during the May ACRA meeting maintained.
“We just hit 5,280 members signed up in just a year and a half, so we’re seeing this shift right now from group health insurance to employers looking for something a little different,” O’Neill said during his presentation during the ACRA meeting. Known as the individual coverage health reimbursement arrangement, or ICHRA, is an alternative option that emerged under the Trump administration as a proposed expansion to the Qualified Small Employer Health Reimbursement Arrangement, itself a product of the 2016 21st Century Cures Act.
Additionally, he said, one of the nonprofit entities that operates out of the hub was able to offer benefits to staff for the first time. “We’re very pleased; we’re able to offer what we’ve been able to offer in the past . And we have an organization that has been able to offer employees insurance for the first time.” “We provided group health insurance to our employees,” he said. “We kept seeing our group plans going up every year. 2000 to 2001, it was going up about 10%, so our plan was to raise the salaries of our employees and just go on the marketplace, and it would all be taxable income. Then we learned about ICHRA, contacted Brad and it was a very seamless process working with him that now allows us to support our employees pre tax like we did before. It’s a group plan, but it’s individually focused. We saw our cost drop to the organization about 22%.”
That’s great for organizations that traditionally didn’t have the budget to offer staff any sort of health care package, said Colin Laird, executive director of the Third Street Center in Carbondale and satisfied ICHRA customer. “We work with brokers and insurance companies all around the country, so with NexBen, we’re the technology that powers a lot of things up,” he said. “Really what it is … it is a group health plan; the employer is offering a group health plan; the difference is, just like a 401(k), it’s a defined contribution.”
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