The History of ICHRAs

The introduction of ICHRAs represented a shift in the way employers offer health benefits — providing more flexibility and choice to employees. Each employee has unique needs and life experiences that warrant different health insurance preferences.

Employees want options to choose their coverage and their healthcare providers. And employers want options to take control of rising costs while providing valuable benefits options for their employees.

So where did ICHRAs get their start? Let's go back to 2016.

2016: The Beginnings with QSEHRA

The Obama administration signed the 21st Century Cures Act into law in December 2016. This was the beginning of Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) and set the stage for ICHRAs.

QSEHRAs were designed to help small businesses with fewer than 50 full-time employees provide health coverage. Under this arrangement, small employers could offer up to $4,950 per year (or $10,000 for families) in pre-tax funds to employees. This amount could be used towards purchasing individual health insurance plans or for qualifying medical expenses.

The QSEHRA was a significant step forward, providing small businesses with a way to offer health benefits without the complexities and high costs associated with traditional group health insurance plans. However, its applicability was limited to smaller employers and faced certain restrictions, which prompted further developments in health reimbursement arrangements.

2019: The Evolution to ICHRA

Expanding on the limitations of QSEHRA, the Trump administration introduced ICHRA. The ICHRA concept was formally introduced through a set of final regulations issued by the Departments of Treasury, Labor, and Health and Human Services in June 2019.

These regulations expanded the usability of HRAs (Health Reimbursement Arrangements) to allow employers of all employee sizes to offer ICHRAs as an alternative to traditional group health insurance.

Unlike QSEHRA, which was restricted to small businesses, ICHRAs enabled employers to provide a defined contribution that employees could use to purchase individual health insurance plans. This new flexibility meant that ICHRAs could be integrated into a wider range of organizational contexts, accommodating diverse workforce sizes and needs.

2020: The Implementation of ICHRA

The new regulations governing ICHRAs came into effect in January 2020 —?allowing employers to start offering ICHRAs to their employees. This marked a significant departure from offering a traditional group health plan.?

ICHRAs enable employees to select individual health insurance plans that fit their individual needs supported by employer-funded reimbursements.

This change addressed several key issues faced with traditional group plans:

• Personalization: Employees could select plans that met their individual health needs and preferences, rather than being confined to a one-size-fits-all group plan.
• Cost Control: Employers could set a fixed reimbursement amount, providing greater control over healthcare costs while still offering valuable benefits.
• Flexibility: ICHRAs allowed employers to provide benefits across different locations and adjust offerings based on evolving workforce demographics and needs.

Overall, the introduction of ICHRAs represented a significant evolution in employee health benefits, providing a more flexible, customizable, and cost-effective solution for both employers and employees. This evolution reflects a broader trend towards personalizing employee benefits and adapting to changing workplace dynamics.

If you're ready to enter a new era of health insurance, we'd love to usher you in. Contact our team at [email protected].