Transamerica Leaps Into Individual Coverage HRA Market

Transamerica has added a new kind of “cash for health coverage” program — an individual coverage health reimbursement arrangement program — to its employee benefits menu.

A worker with a Transamerica ICHRA can use a debit card to pay individual health insurance premiums or other eligible bills, the company says.

Transamerica ICHRA holders can also pay for health care products and services themselves, and then seek reimbursement through the web.

The Transamerica announcement may mean that life and health insurers are shaking off COVID-19 pandemic ice and resurrecting efforts to introduce new types of products and new types of product features.

Transamerica has been around for more than 100 years. The company is now a Baltimore-based arm of Aegon, a Dutch financial services company.

Transamerica has a large benefits operation that helps employers with products such as retirement plans and critical illness insurance. Enthusiastic Transamerica marketing of ICHRAs could give all ICHRA providers a boost.

Cash-for-Coverage Program History

Years ago, many employers wanted to give workers cash the workers could use to buy their own individual health insurance, rather than relying on employer-picked group health coverage.

For employers in most states, the main obstacle to cash-for-coverage programs was health insurers’ use of medical underwriting in the individual market. An employer could add a worker with diabetes to a group health plan, but the worker could not find affordable individual coverage.

Employers have been using HRAs to give workers cash that workers can use to pay for dental care, aspirin, antibiotics and other health care products and services since 2001.

In January 2014, the Affordable Care Act banned medical underwriting in the individual market.

Some health insurance specialists predicted that cash-for-coverage programs could destabilize the group health market by encouraging employers with younger, healthier workers to give up on group health insurance.

Because of that fear, the administration of President Barack Obama blocked use of HRA as cash-for-coverage vehicles, by ruling that an HRA-based health benefits program would be a group health program, for Affordable Care Act regulation purposes. Under that interpretation, a cash-for-coverage HRA program would have to cover essential health benefits without annual or lifetime benefits limits.

The ICHRA

Congress poked a hole in the cash-for-coverage HRA ban by putting a provision creating the qualified small employer health reimbursement arrangement (QSEHRA) program in the 21st Century Cures Act of 2016.

The QSEHRA provision gives small employers a way to use HRAs to offer cash-for-coverage programs.

During the administration of President Donald Trump, regulators developed ICHRA program regulations. Any employer can offer ICHRAs.

The Trump administration had final ICHRA regulations in place in mid-2019. Some benefits companies began trying to help employers set up ICHRA programs for 2020.

The arrival of the COVID-19 pandemic forced employers to focus on efforts to cope with pandemic-related changes and restrictions.

The Market

HRA providers of all kinds recently set up an HRA Council.

Figures on QSEHRA and ICHRA adoption are scarce.

PeopleKeep, an HRA program administrator, says ICHRA program sponsors it has surveyed seem to like the programs, and that 90% of the employers plan to keep their ICHRA programs in place in 2022.

Willis Towers Watson found when it surveyed employers in the summer of 2020 that about 15% were planning to offer or thinking about offering ICHRAs.

Washington

One question for ICHRA program providers and users is whether Congress or the Biden administration will move to change the program.

Traditionally, more progressive Democrats have tended to favor government-run health finance programs. They have seen health account-based programs as increasing health system administrative complexity, and doing more to help high-income workers than to help low-income people.

Many Republicans in Congress have favored use of health savings accounts, which are similar in some ways but come with high deductibles and give individuals true ownership of the account assets.

For ICHRA supporters, the increased visibility of centrist senators, such as Joe Manchin, a Democrat from West Virginia, and Shelley Moore-Capito, a Republican from West Virginia, may be a sign that the current health benefits rules are likely to stay intact.