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In 2023, U.S. employers’ adoption of individual coverage health reimbursement arrangements (ICHRAs) increased by 64%, according to a HRA Council report. An ICHRA allows employers to offer employees a monthly allowance of tax-free money to pay for health care services. They can help control costs and address Affordable Care Act Compliance. The use of ICHRAs is increasing as employers look for ways to control health costs.
Key ICHRA Points
- The average monthly allowance for employees was $908.80 between July 1, 2022-June 30,2023. The median monthly allowance was $550.
- Most employers don’t use waiting periods for new employees to join. Only 31% of employers implemented a voluntary waiting period.
- The most popular submitted reimbursement expenses included insurance premiums, prescription drugs, and office visits. The average was 4.9 office visits with a reimbursement amount of $137.92 and 11.6 prescription drug requests, averaging $275.42.
Takeaway
Traditional health insurance may not be flexible enough to meet today’s needs. Some employers are using ICHRAs which provide a monthly amount for employees to spend on individual insurance plans and out-of-pocket expenses. 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.
