ICHRAs becoming popular alternative to group plans

PeopleKeep, a Murray-based human resource SaaS company, has released a new report that shows that individual coverage health reimbursement arrangement plans (ICHRAs) are becoming more prevalent as an alternative to traditional employer-sponsored group health plans and that such plans are proving beneficial to employees.

Under the provisions of an ICHRA, an employee who maintains an individual health plan at his or her own expense can be eligible for reimbursement by the employer of healthcare costs like monthly premiums and out-of-pocket costs like copayments and deductibles.

PeopleKeep’s report found that the average{mprestriction ids="1,3"} monthly allowance employers offered their employees from midyear 2022 to midyear 2023 was $908.80 — much higher than the average lowest-cost health insurance premium of $472, as reported by the Kaiser Family Foundation.

The data showed that approximately 56 percent of employers offered a premium-plus ICHRA, enabling their employees to use their allowances for more than 200 qualifying out-of-pocket medical expenses in addition to individual health insurance premiums. Employers who chose to cover premiums plus out-of-pocket expenses were offered an average monthly allowance that was 49 percent greater than employers who chose to cover premiums only.

On average, employers reimbursed employees $573.14 for their individual insurance premiums. Outside of premiums, the most common expenses for which employees submitted reimbursement requests were doctor’s office visits and prescriptions.

“With the acceleration in the number of companies offering an ICHRA and employees opting into participation, the benefit has asserted itself as a strong alternative to traditional group health insurance plans,” PeopleKeep’s study authors said.{/mprestriction}