1.5 minute read
A new Remodel Health report shows a 29% increase in U.S. employers adopting individual coverage health reimbursement arrangements (ICHRAs) from 2023-2024.
The report unveils a trend of widespread adoption across various industries, encompassing both small businesses and applicable large employers (ALEs). While ALEs are bound by the large employer mandate to offer health benefits, smaller companies enjoy more flexibility. The report highlights that ICHRAs have been embraced by organizations in nearly every state. Notably, adoption among organizations with 100 or more employees soared in Arkansas, Maryland, New Hampshire, Oregon, and Wisconsin. Additionally, 12 states saw ICHRA adoption flourish among small businesses (2-20 employees), including Alabama, Alaska, Idaho, Iowa, Kansas, Louisiana, Maine, Missouri, New Mexico, Rhode Island, West Virginia, and Wisconsin.
ICHRAs let organizations provide employees with a tax-free monthly allowance for personalized health care, helping control costs and meet ACA requirements. As a result, more plan sponsors are adopting ICHRAs to offer tailored health benefits.
Employer Takeaways
ICHRAs offer a flexible alternative to traditional group health insurance, allowing employers to tailor reimbursements for medical expenses or premiums. Employers can use ICHRAs to reimburse all medical expenses, just premiums, or specific nonpremium costs. Typically, they're used for individual health insurance or Medicare premiums. ICHRAs also allow eligibility based on employee classes, benefiting diverse workforces.
While ICHRAs offer flexibility, it's important to note that they come with certain limitations. For instance, employers are unable to provide employees with the option to choose between an ICHRA and a traditional group health plan.
Employers should continue to monitor the trends to make the right employee benefits decisions. Download the bulletin for more details.
National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.
