Starting this year, employers had a new option to reimburse workers who obtain their own insurance coverage for qualified expenses: individual-coverage health reimbursement arrangements (or ICHRAs).
As employers and advisors search for new ways to control health care costs, these plans provide an alternative. Take Command Health has been tracking adoption and utilization trends during the inaugural year of ICHRAs.
“With open enrollment here, many business owners and brokers are evaluating their options for group benefits, searching for flexible and budget-friendly options,” Jack Hooper, CEO of Take Command Health, said in a statement. “Our report benchmarks what similar companies are doing and makes a strong case for the tax-advantaged reimbursement model of health insurance.”
Related: How can we improve ICHRAs?
Hooper continued, “Despite the uncertainty that we’ve all faced these past few months, we’ve seen signups for individual coverage HRAs climb steadily and double since January. Carriers are returning to the individual market and individual premium prices are stabilizing—critical factors in the success of this new HRA.”
Here are five findings from their latest report:
1. The average reimbursement rate for ICHRAs this year was $749.93 for singles.
For couples, the average is $847.20 and $931.95 for families. However, it noted that there were significant outliers, with the smallest reimbursement coming in at $40, and the largest at $20,000 per employee per month.
Employers can customize benefits covered by the HRA by class, such as part-time or full-time workers. The report found the average plan had two classes, but that number got as high as 12.
2. The average allowance increased to $761.46 per month for single workers.
Unlike Qualified Small Employer HRAs, ICHRAs don’t include limits on reimbursements, according to Take Command. In 2020, employers could only reimburse up to $437.50 per month for single employees and $883.33 per month for families.
Employers who switched from a QSEHRA to an ICHRA were able to increase their offerings. For families, the allowance increased to an average of $929.99 per month for families.
3. ICHRAs are most popular in battleground states.
As we wait for election results to be finalized, it’s interesting to note that these products have the highest enrollments in many of the states where results are uncertain. The top 10 states where enrollment is the highest include: California, Florida, Texas, New York, Pennsylvania, Oregon, Colorado, North Carolina, Massachusetts and Washington. Take Command notes that these areas have strong individual markets, making them ideal solutions for employers there.
4. Professional services is the top industry for ICHRAs.
The report found adoption was highest at companies in the professional services industry at over 20%, followed closely by associations and nonprofits, at 18.8%. The technology, health care and manufacturing industries round out the top five, which accounts for about two-thirds of the firms offering these products.
5. Employee enrollments are in line with other group benefits.
Take Command found 58% of eligible employees who are offered an ICHRA enroll, just trailing the 61% national average of employees who obtain coverage through their employers. That’s notable as workers have to secure insurance coverage on their own to be eligible for the HRA.