ICHRA & QSEHRA

When evaluating health insurance options, especially for an organization considering the pros and cons of Individual Coverage Health Reimbursement Arrangements (ICHRA) and Qualified Small Employer Health Reimbursement Arrangements (QSEHRA), along with fully insured and self-funded plans, employers need to understand the different aspects of each option. Here’s a breakdown to help an organization, big or small, make an informed decision:

ICHRA (Individual Coverage Health Reimbursement Arrangement) vs. QSEHRA:

Both ICHRA and QSEHRA are employer-funded benefit programs that provide reimbursement for employees’ health insurance premiums and other qualified medical expenses. They differ primarily in eligibility, contribution limits, and design flexibility.

Fully Insured vs. Self-Funded Plans:

Employers must also weigh whether a fully insured or self-funded health plan is the best option for their business. Here’s a breakdown:

Top Vendors for Both Plans:

1. Fully Insured Plans: UnitedHealthcare Kaiser Harvard Pilgrim Aetna Cigna BlueCross Blue Shield Humana

These insurers provide a wide array of group health insurance options with pre-set benefits, coverage, and provider networks.

1. Self-Funded Plans: BCBS (Blue Cross Blue Shield) - Self-Funded Programs Cigna - Self-Insured Programs Aetna - Self-Funding Solutions UnitedHealthcare - Level Funded Plans (for smaller self-funded groups) Allstate - Level Funded Plans, Captives - Pareto Captive Resources Roundstone, Berkley, Benecon
2. Selection of TPA (Third Party Administrator) is key. Select a TPA who is innovative, cost containment focused, and responsive.
3. Pharmacy Benefit Manager - Selection of a PBM is critical.. Drug Inflation/Spend is outpacing Medical Inflation.

For self-funded plans, third-party administrators (TPAs) are often involved to handle claims and compliance, especially for smaller employers.

Cost Considerations:

• Fully Insured Plans: Typically higher premiums, as the insurance carrier assumes risk and includes profit margins. Employers will pay a fixed monthly amount per employee, regardless of claims.
• Self-Funded Plans: Costs can be more variable depending on claims. Employers will pay per employee based on claims experience but can potentially save if claims are lower than expected. Employers need to have a reserve fund or stop-loss insurance for catastrophic claims.
• ICHRA & QSEHRA Costs: In both of these options, the employer sets a budget for reimbursement. For ICHRA, the costs are typically higher due to greater flexibility, whereas QSEHRA has fixed contribution limits. Both may have lower overall costs for the employer compared to a fully insured plan if employees do not use their full reimbursement.

Conclusion:

When choosing between ICHRA, QSEHRA, and traditional group health plans (fully insured or self-funded), employers must weigh:

• Size of the organization: Larger companies may benefit from ICHRA’s flexibility, while small businesses may prefer QSEHRA’s simplicity.
• Cost considerations: Self-funded plans offer potential savings but carry more risk and administrative burden. Fully insured plans are easier to manage but come with higher premiums.
• Employee preferences: Offering more options with ICHRA could be more attractive to employees who want individualized coverage.

Reach out to Cambridge Insurance Advisors Cambridge Risk Advisors for guidance and advice. We are here to help. #HealthInsurance #Selffunding #captive #HR #employeebenefits