Is ICHRA a Good Match for Your Business?

In today’s competitive job market, businesses are continually looking for innovative ways to attract and retain talent while keeping their budgets in check. One strategy that’s gaining popularity among companies of all sizes and industries is the Individual Coverage Health Reimbursement Arrangement (ICHRA).

This health benefit plan allows employers to reimburse employees for individual health insurance premiums, offering greater flexibility for both parties. But is an ICHRA the right match for your business?

Let’s explore how this plan works and if it can benefit your business.

Understanding ICHRA

ICHRA is a relatively new type of health reimbursement arrangement that was introduced in 2020. Following QSEHRA, which made it possible for businesses of 50 employees or more to offer health insurance, ICHRA opened up access to healthcare for businesses of all sizes (at least one W-2 employee).

Unlike traditional group health plans, ICHRAs give employers the ability to give employees a fixed dollar amount to purchase individual health insurance.

Employees choose the plan that best suits their needs, and employers control their healthcare costs by setting a budget for reimbursement. The flexibility and cost-controlling aspects of ICHRA make it a viable option for businesses across various industries.

Here are some other considerations based on the nature of each workforce:

Small Businesses

Many small businesses find it difficult to offer health benefits to their employees. The high cost of traditional group health plans can be prohibitive, leaving many small businesses without viable health coverage options. This is where ICHRAs can be particularly beneficial.

With an ICHRA, small businesses can control costs by determining how much they want to contribute to employee health insurance premiums. Employees, in turn, have the freedom to select the health plan that suits their individual needs. This personalized approach can be a game-changer for small businesses looking to compete with larger companies in attracting and retaining talent.

Restaurants and Hospitality

High turnover rates are common among restaurant and hospitality industries. Plus, their workforce often includes many part-time and seasonal employees. Providing health benefits in these sectors can be challenging due to the variability in hours worked by employees.

ICHRA allows businesses to use employee classes to offer different reimbursement rates based on:

• Full-time employees
• Part-time employees
• Seasonal works

This allows them to provide health benefits that fit the needs of a diverse workforce. Which helps businesses stay competitive in hiring, but also demonstrates a commitment to employee well-being.

Professional Services and Healthcare

Professional services and healthcare organizations also have a diverse mix of full-time, part-time, and contract workers. As a result, traditional group health plans may not meet the varying needs of these employees, especially for contract workers.

ICHRA plans allow employers in these industries to offer a more tailored approach to health benefits. By providing reimbursement for individual health insurance, businesses can ensure that all employees, regardless of their employment status, have access to healthcare. This can lead to increased employee satisfaction and loyalty.

Landscaping and Construction

Landscaping and construction companies often have fluctuating workforce sizes depending on the season or demand for services. Employees in these fields may work variable hours or have temporary employment, which can make it difficult for employers to offer consistent health coverage.

ICHRAs are cost-effective because they allow employers to offer health benefits that can be adjusted based on employee status and work hours. Moreover, offering an ICHRA can help attract skilled workers, as it provides a unique benefit that sets the employer apart from competitors.

Conclusion: Is ICHRA Right for Your Business?

Whether you run a small business, manage a restaurant, or oversee a construction company, ICHRAs can provide a competitive edge in the hiring market while keeping your healthcare costs manageable.

By allowing employees to choose their health coverage and offering tailored reimbursement options, ICHRAs empower businesses to meet the diverse needs of their workforce.