Deciding on a comprehensive health insurance plan that does not break the bank is one of the most crucial decisions an employee has to make. With everything else, the cost of health insurance is also on a continuous rise. Employers are always looking for solutions to manage costs while keeping their employees covered for their health benefits. One excellent way to lower the cost of health insurance is to switch to an individual coverage health reimbursement arrangement or ICHRA. While switching to a new plan might seem a complicated and costly process, this is only sometimes true. ICHRA can help you bring down your health insurance costs for the new year. Furthermore, partnering up with a reliable provider can help you choose a plan that suits your budget and help you save money for your future investments.
What is an ICHRA?
Unlike traditional group insurance plans, Individual Coverage Health Reimbursement Arrangements (ICHRAs) allow you to offer pre-tax dollars to your employees to spend on their healthcare needs. The employer will set a maximum amount to reimburse employees for their chosen health insurance plan.
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How Can ICHRA Help Your Company Save Money on Health Insurance Plans?
With many unique features, ICHRA can be a great solution to cut costs for employers while providing comprehensive health coverage for their employees. Here are some of the ways ICHRA can help your company save money on health insurance plans:
ICHRA is Tax-Free
One unique feature of ICHRA is that amount contributed by employers for their health insurance needs is not counted towards their wages. Due to which amount is free of taxes that otherwise apply to regular payrolls. This amount is used to pay employees’ monthly premiums and other out-of-pocket expenses.
ICHRA Saves You from Increasing Health Insurance Rates
The cost of health insurance plans is continuously increasing with every passing year. Both monthly premiums and out-of-pocket expenses are affected by inflation. Finding health insurance that suits your budget while providing essential coverage is a hectic and time-consuming process. And with the progressive changes in healthcare plans, everyone needs to reassess their insurance and calculate its cost every year to see if their plan still works for them or if they need to switch to another, more affordable one.
ICHRA can save you from this hassle and protect you from these exponentially rising expenses. One of the unique features of ICHRA is that it bypasses the yearly increasing health insurance costs by allowing employees to capitalize on savings. Traditional health insurance plans do not provide these savings to their members. For instance, with an ICHRA, you can get lowered premiums on ACA Marketplace as directed by American Rescue Plan (ARP). This increases the availability of tax credits. This way, the company can save its dollars as it needs to pay lower premiums that match the market prices and vary according to its employees’ needs.
ICHRA Provides More Cost Control for Employees
With group health insurance plans, all the cost that goes into premiums and out-of-pocket expenses is ultimately passed onto employees from group insurance and employers. ICHRA has a great feature of providing employees with the freedom to opt for a health plan that fulfills their needs in the best manner and covers their required benefits while keeping their expenses to the minimum possible limit. ICHRA can save unexpected costs by allowing the employer to set a maximum limit that their employees can use. In case healthcare costs exceed this limit, employees will be responsible for this extra expense. This can help companies save as much as 20% to 30% on health insurance plans.
Increase Your Savings by Contacting a Reliable Partner for ICHRA Solutions
While switching to ICHRA can be your best decision to save money for your company’s future investments, understanding its complete process and staying in touch with every new development that happens is crucial. You can automate the process of getting started with ICHRA and save yourself the trouble of dealing with additional vendors. This can further help you save money.
Partnering up with a reliable company like LIG Solutions can help you get started with ICHRA and take away the headache of employee communication, account analytics, ongoing partnership, etc., and help things run smoothly. Here are LIG, we offer our expertise and knowledge to help you be aware of all your ICHRA solutions and choose an affordable health insurance plan.
How many Companies are saving by Switching to ICHRA?
Moving from traditional insurance plans to ICHRA has benefited many companies in terms of saving more money. In a recent example, switching to ICHRA, a property management company saved 54% of their costs expended on monthly premiums. This company operates in four states and has 170 employees working for them. In addition, choosing ICHRA increased employees’ satisfaction as they had more freedom to choose a health plan. The broker provided them with 33 coverage options from seven different carriers.
Which Businesses Can Offer ICHRA Plans?
The beauty of ICHRA plans is that they work for all kinds of businesses. You can offer ICHRA plans to your employer even if you are running a small-scale business. ICHRA can be provided as a stand-alone benefit or can be a part of other group health plans. It is a perfect plan for you if you are running a business, nonprofit organization, government entity, or religious organization and have at least one W-2 employee.
In conclusion, switching to ICHRA can be one of the most lucrative decisions you can make for the prosperity of your company and employees. It saves you a lot of money and can help you with your future investments, increase recruitment, and make your employees happy. All these factors will ultimately play a role in building a better future for your business.
Switching from one plan to another is not always easy, and getting expert help can assist you in making a smooth transition while enabling you to choose the best possible ICHRA solution. Here at LIG, we offer assistance to take care of these matters for you with our expert knowledge and experience in the field.