Should I consider an ICHRA for my company’s health insurance?

With an ever-changing health insurance landscape, employers are looking for alternative health care solutions.

An individual coverage health reimbursement arrangement (ICHRA) represents a welcome change for many – particularly large employers who struggle to manage their claims year over year.

Auburn-based CGI Business Solutions, the largest employee benefits firm in New Hampshire and one of the largest independent firms in the country, discussed their experience with ICHRAs.

Panelists: Dan Cronin, president and CEO, CGI Business Solutions, cgibusinesssolutions.com

Steve LeSage, senior benefits consultant, CGI Business Solutions, cgibusinesssolutions.com

What exactly is an ICHRA?

Cronin: ICHRA stands for individual coverage health reimbursement arrangement. When the ACA was first passed, employers were prohibited from incentivizing their employees to purchase an individual plan in the marketplace. In 2019, the Trump administration changed this and allowed employers to begin reimbursing employees for individual policies.

Understanding this could have a significant impact on employers, we quickly began researching, building and testing a solution that would work for our clients. In late 2020, CGI introduced our Private Exchange solution that allowed employers to take advantage of the new ICHRA rules. Since then, we’ve provided our clients a way to offer an alternative to their traditional group insurance plan that has saved some of them, and their employees, a significant amount of money.

Why should a large employer (51 or more employees eligible) consider an ICHRA?

LeSage: Large employers are rated primarily on their claims experience. If an employer is struggling to manage their claims (multiple high-cost claimants, high medical loss ratio, etc.), there can be limited options to choose from at renewal. ICHRAs are attractive because they remove “claims rating” from the equation and instead focus on age-rated plans available in the individual market of the state their employees live in, respectively. As a result, we’ve seen savings in the 30% to 40% range for employers, sometimes even higher.

I heard ICHRAs are hard to manage. is that true?

Cronin: As many of our clients have told us, our Private Exchange solution has taken the “ick” out of ICHRAs for them. Employers can manage and track their employees’ coverage with ease and ensure that their employees’ experience is positive. Our Private Exchange also allows employers to house all their benefits on one platform and provides a painless shopping experience for employees when it comes to choosing their benefits.

How does your Private Exchange work differently from national ICHRA solutions?

LeSage: Most national solutions are SaaS (software as a solution) products. While they do the job of allowing employees to enroll, many employees become confused on which plan to choose and how to pay for their insurance, get reimbursed, etc.

CGI’s Private Exchange completely streamlines the process for employers and allows employees to continue paying for their health insurance through pre-tax payroll deductions (versus paying out of their pockets and getting reimbursed). Our consultants also help guide and advise on the most competitive options available in the individual market, taking much of the guesswork out for employers and employees.

Most importantly, CGI takes an active role in supporting the employer with local service and providing everything from initial ICHRA notices, reporting, compliance, as well as giving them the ability to manage all their other benefits under one roof.

Finally, CGI has a transparent PEPM (per employee, per month) pricing model, which is usually significantly lower than most national solutions. Our solution has forced many benefit brokers, who historically advised their clients against ICHRAs, to partner with national firms. This means an additional layer of compensation is added to the national carrier fees, creating an even further distance between our solution’s cost and that of national providers.

How many of your clients are doing this, and what has their experience been so far?

Cronin: We currently have 18 clients (all large groups) taking advantage of ICHRAs, and we are having more and more conversations every day with both current and prospective clients. From nonprofits to manufacturing, some of our clients have literally saved millions of dollars a year. (One client recently saved $3.5 million off their renewal.) Because of the significant savings, some clients have opted to help employees with first-dollar coverage (copays, prescriptions, etc.) which has made an enormous impact on morale and the overall perception of that particular employer’s health insurance plan.

With that said, it’s important to note that we understand that every employer is different and ICHRAs may or may not be a good fit based on a number of different factors. CGI’s benefit consultants provide an in-depth analysis for each current and prospective client to assess what is the best way to finance your health care plan (fully insured, partially self-funded, ICHRA, etc.).

In summary, if you’re an employer struggling to manage claims, you’re facing a double-digit increase in health insurance rates, or perhaps your broker has advised you against ICHRAs, CGI welcomes the opportunity to provide a no-obligation analysis to see if their Private Exchange is a good fit for your organization.