Practical realities could limit use of the new individual coverage health reimbursement arrangements (ICHRA) program.
Kim Buckey, vice president of client services at DirectPath, a benefits communication firm, talks about the constraints on growth today, in written comments about the ICHRA program.
Small and midsize employers might like the idea of offering an ICHRA, but the problem is that providing health benefits through an ICHRA program could make a complicated activity even more complicated, Buckey says.
If employers decide to set up ICHRA programs, “they’d better be willing to commit to a lengthy and robust communications campaign, to ensure that their employees understand what it is they are buying,” Buckey says.
The ICHRA Program
Years ago, before the Affordable Care Act health insurance came to life, some employers used “premium-only plans” to give employees cash that the employees could use to buy their own health coverage.
Most of those programs stayed small. One obstacle was that, in most states, employees who were trying to buy individual major medical coverage faced rigorous medical underwriting standards. Employees who had diabetes or were obese might have no practical way to buy coverage.
In January 2014, under ACA rules, insurers began to offer individual coverage on a guaranteed-issue, community-rated basis throughout the country. But the administration of former President Barack Obama tried to stabilized the traditional group health market by adopting regulations that blocked employers from giving workers cash for coverage.
A 2016 law made a cash-for-coverage HRA program, the qualified small employer HRA (QSEHRA) program, available to small employers.
President Donald Trump listed offering all employers access to cash-for-coverage HRAs as one of the pillars of his efforts to attack the ACA framework. His administration acted on that idea Thursday, by completing work the ICHRA regulations.
The ICHRA regulations will let an employer contribute as much as it wants to employees ICHRA accounts. The employees must use the cash to pay for individual major medical coverage.
Regulators have tried to prevent employers from using ICHRA programs to discriminate older, sicker employees by setting some restrictions on how the programs work. An employer is supposed to offer an ICHRA program either to all employees or to units of a minimize size. Employees are not supposed to be able to choose between having an ICHRA or signing up for traditional group health coverage.