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How ICHRAs Solve Today’s Top Benefits Problems

By John Kelly, Nexben CEO

This article was originally published in America’s Benefit Specialist magazine.

Last spring a pair of surveys rolled out, highlighting the current state of health benefits: “2022 Emerging Trends in Health Care Survey”¹ from Willis Towers Watson and “2022 Health at Work: A Report from
Quest Diagnostics.”²

The results? Not so great … but there is a solution.

Employees Demand Better Benefits

The surveys affirmed that employees want better and more affordable healthcare benefits from their employers. In fact, in the Quest Diagnostics Report, a whopping two-thirds of employees reported that they think their employer should pay more for their health benefits.

For today’s employees, benefits aren’t just a perk—they’re a major player in attracting and retaining talent. In the Quest Diagnostics Report, 36% of those thinking about changing jobs cited the need for better healthcare benefits as a reason why they are looking.

These insights are a big deal considering today’s unprecedented job market as millions of people leave their jobs. In March, a record 4.53 million people quit their jobs. That surpassed the previous high mark of 4.51 million in November 2021.³

Employers Need More Cost Control

The surveys also revealed what many of your clients already know: Companies are struggling to control the costs of offering employee benefits. Healthcare costs have been rising faster than inflation for years, leading to higher premium rates for health insurance. In simple terms, employers and employees are spending a higher percentage of their revenue on healthcare benefits today than they did 10 years ago. It’s no wonder that 94% of U.S. employers say that controlling the cost of healthcare benefits is a top priority.⁴

This priority is mirrored in the Quest Diagnostics Report, which found that 90% of HR executives believe employers need to control health insurance expenses more.

“Many employers find themselves in the middle of a perfect storm,” said Lindsay Hunter, senior director of health and benefits at Willis Towers Watson. “Inflation and rising healthcare costs, ongoing emotional and physical wellbeing needs, and attraction and retention challenges caused by a tight labor market are driving employers to carefully evaluate their benefit programs and strategies. In particular, they are looking for ways to make healthcare more affordable for themselves and their employees.”

Fending Off the Great Resignation

The Great Resignation is putting pressure on companies. It’s forcing them to rethink their healthcare benefits and look at ways to attract new employees and keep existing ones. In fact, 90% of human resources executives from the Quest Diagnostics Report believe they will have to improve benefit packages and increase wages during the next year.

“In a time when skilled talent is [leaving] organizations at a rapid pace, managing benefit cost for both the employer and their employees is paramount,” added Hunter.

But these HR executives are running into a technical challenge: More than three-quarters (77%) say they want to lower healthcare benefit costs for their employees, but don’t have the tools to do so.

Innovating with ICHRAs

So what can a broker do? How can you help current and prospective clients navigate today’s benefits landscape and reduce the associated costs?

Innovate by introducing Individual Coverage Health Reimbursement Arrangements (ICHRAs) to clients.

Effective January 1, 2020, an ICHRA is a group health benefit based on a pre-determined contribution that gives individuals choice and employers flexibility.

By offering an ICHRA, businesses of any size can contribute a pre-determined, pre-tax allowance to employees, who then have the freedom to use those funds toward an individual insurance policy of their choice. For many businesses, an ICHRA can provide a welcome alternative to traditional group health benefits, representing a big shift in the way health insurance is delivered.

The Smarter, Simpler Solution

Unfortunately, while admirable in theory, the standard approach to ICHRAs can be very complicated for brokers (as well as their clients) to quote, administer and manage. Between the time-consuming administration, too many plan options and cumbersome reimbursement process, standard ICHRAs can be downright intimidating for brokers.

The good news is that ICHRAs don’t have to be complicated. Brokers should look for ICHRAs that make it easy for everyone with online, all-in-one solutions that are intelligently designed to simplify the entire experience. This includes platforms that allow brokers to generate lightning-fast quotes based on multi-carrier plan comparisons that support employer contribution design, to employee enrollment assistance and monitoring functionality, to seamless premium payment processing. Finding an end-to-end benefits solution can also lift the administrative burden for brokers and their clients by eliminating recurring tasks and simplifying the process of managing group benefits.

Greater Control and Access

With ICHRAs, brokers can solve one of their clients’ biggest stressors today: soaring, shifting healthcare benefits costs. ICHRAs put employers back in control, allowing them to confidently set their health plan budget by setting a predictable, pre-determined contribution for each employee.

ICHRAs also enable employers to group employees into different eligible classes, allowing them to further tailor and expand coverage options to their increasingly diverse workforce—including part-time workers and those who may work out of state.

For brokers whose clients are struggling to stay competitive amid a tight labor market, the flexibility and versatility of ICHRAs can help you remain relevant and responsive to your clients’ top concerns today.

More Flexibility and Freedom

ICHRAs deliver more control to employees, too: Once the employer has defined its pre-determined contribution to each employee (or class of employees), employees are free to use those funds to shop the individual marketplace and select the policy that best fits their needs.

For many modern workers, access to a diverse marketplace is an incredibly attractive alternative to the constraints of limited, one- size-fits-all group health plans. By offering ICHRAs to clients, you can help businesses attract and retain workers by meeting their growing demands for more personalized, budget-conscious healthcare benefits.

The future of health benefits isn’t dangling on the horizon—it’s already here, thanks to the rollout of ICHRAs. And the brokers willing to innovate and embrace the change today will become the industry’s leaders of tomorrow.

John Kelly’s singular passion is to finally and permanently fix the entire health benefit experience— bringing it into the 21st Century and leading it beyond as the industry evolves. Prior to his work at Nexben, John was founder and CEO of the BrocorXchange. He earned his BA at the College of Charleston in South Carolina.