In a previous post, we looked at how offering an Individual Coverage Health Reimbursement Arrangement (also called an Individual Coverage HRA or ICHRA) opens up a Special Enrollment Period (SEP) for employees. Meaning an employer can offer ICHRAs outside of an Open Enrollment Period to offer employees health insurance plan benefits.
So why is this important? Why would an employer offer an Individual Coverage HRA outside of Open Enrollment? Mainly because an ICHRA gives employers and their employees more benefit options and flexibility. Let’s take a look at a few instances.
A Group Wants to Start Offering Benefits
Some employers don’t currently offer health benefits but may decide that now is the time to start. This decision may be based on many objectives, but most importantly, they want to offer benefits now.
All an employer has to do is start an ICHRA. This triggers an SEP and allows employees to sign up for health insurance.
It’s Time to Switch from a “Traditional” Group Plan
With the rising cost of health insurance, there may be companies experiencing a dramatic rise in the cost of traditional group health plans. They may have signed up for the plan during open enrollment and now find that the premium payments are too high and they need an alternative. They can begin an ICHRA to replace the old group plan at any time.
In this situation, an employer would offer an ICHRA. Once a start date has been established during planning, the company needs to let the carrier (for their current plan) know that they will be stopping coverage. They should tell the carrier the end date will be the day before the start date of the ICHRA.
Attracting Part-Time or Seasonal Employees
It takes more than just a competitive wage to attract quality applicants in this employment market. Offering benefits to part-time and seasonal employees may be the differentiation that a company needs to get highly qualified people in the door.
Not only can an ICHRA be offered at any time in the year, but it can also be offered to different classes of employees. Meaning, full-time employees can remain with the health insurance benefits they have right now and offer an ICHRA to only part-time and seasonal employees. If the employer wants to cancel the entire plan and offer the ICHRA to all employees, they can do that as well.
A Company is Hiring More Employees Outside the State they are Headquartered In
A company may be hiring more people outside of its home state. Maybe they are launching a new office in a different state or hiring remote team members. An existing group health plan may not provide good coverage to these employees outside the state where the plan originated. In this case, an ICHRA would be an excellent alternative for those employees.
All the company needs to do is start the new ICHRA for these employees. The other employees can stay on the original plan.
Conclusion
These are just some circumstances where an ICHRA’s flexibility and range of advantages can help a company solve benefit issues. ICHRAs can be a powerful tool to help employers control costs and attract and retain top talent while giving employees a choice of benefits that fit their needs.
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