By now, Individual Coverage Health Reimbursement Arrangements (ICHRAs) are no secret. Emerging only two years ago as an obscure addition to federal health insurance regulation, ICHRAs are now among the hottest topics in employer-sponsored benefits. But any significant employer shift to ICHRAs will require answer to a pair of important questions:
- Is there an ICHRA role for benefits administration (BenAdmin) platforms?
- If so, what exactly is it?
We can begin to answer both by examining the motivation for companies large and small to migrate to ICHRAs. For small companies, ICHRAs are often a way to do something as an alternative to not offering employer sponsored health insurance. In fact, 70% of the small employers (<50 employees) offering an ICHRA today are contributing to their employees’ health insurance for the first time, according to Take Command Health. ICHRAs also allow small employers to get out of the often-burdensome benefits administration business. So, at the end of the day, there may be very little opportunity for BenAdmins in ICHRA-based small employers.
Large employers, however, are another thing.
There are several reasons why large employers might adopt ICHRAs—but getting out of the benefits administration business is not one of them. First, a feature of ICHRAs is that they allow employers to move classes of employees to ICHRAs while keeping others on their existing group health plans. This provides more choice—and therefore a better benefit experience—to certain classes of employees. The last thing such employers want is to undermine a better insurance experience with a lesser benefits administration experience. These employers will very much want their BenAdmins to support individual and group products.
A second reason large employers that adopt ICHRAs will not move away from BenAdmins is that they want to keep certain products (e.g., group life and disability) on the group “chassis.” This, too, requires BenAdmins to support both individual and group products.
All of which suggests a three-point game plan for BenAdmins to remain competitive in an ICHRA world:
- Support both individual- and group-plan comparison. BenAdmins must be able to support a hybrid individual and group plan comparison experience. For instance: group health and ancillary for some employees but individual health and group ancillary for other employees. And unlike the group market, where a typical employee may choose from a handful of medical plans that are fairly easily configurable, tens (if not hundreds) of plans may be available and will therefore need to be configured.
- Support both individual- and group-plan decision support. Accounting for tens (or hundreds) of medical plans exacerbates the complexity of plan choice by each employee. So BenAdmins must shepherd employees through the decision process with the appropriate tools and features. What was once optional (shop-by-doc, shop-by-drug) is now table stakes.
- Support both individual- and group-enrollment and eligibility changes. Only offering plan selection during open-enrollment period (OEP) is not enough. BenAdmins will need to support individual enrollment, demographic changes, QLEs, etc. for individual products. This represents a whole new integration challenge for BenAdmins.
Bottom line: ICHRAs are an opportunity
ICHRAs do not spell the end of benefit administration— at least not with larger employers. But BenAdmins will need to enhance their platforms to support this new and important coverage option. And in doing so, they will set themselves apart from competitors who disregard a coverage option that could become as ubiquitous as 401(k)s.
If you’re interested in reading more of Vericred’s 2021 ICHRA research and learning how APIs can streamline the development of ICHRA solutions, download our full-length ICHRA toolkit.
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