Healthcare costs are a top concern among Americans, and ever-rising premiums are putting strain on both employers and employees. As of January 2020, new federal regulations allow employers to take advantage of expanded usability of Health Reimbursement Arrangements (HRAs), introducing Individual Coverage Health Reimbursement Arrangements (ICHRAs). ICHRAs (pronounced ick-rahs) are an employer-funded, tax-free health benefit used to reimburse employees for individual health insurance plan premiums. It represents a major shift both in the delivery of healthcare insurance and in its value for employees.
With an ICHRA, employers can create a group health plan using pre-tax dollars to define contribution amounts, confidently setting their health plan budget. They also have more flexibility in overall plan design to better meet the needs of individual employees. An ICHRA has the potential to save employers money through greater cost control compared with a traditional group health insurance plan, and it allows employees the freedom to choose the individual healthcare coverage that best fits their situation. (Learn more about how an ICHRA works.)
Trovia Employer Benefits
Trovia, an online marketplace for ICHRA offerings powered by Nexben, offers all of the advantages inherent in this new type of group health plan as well as those provided by Nexben’s technology platform. (Learn more about Nexben.)
Managing health benefits is complex—from selecting plans, to managing costs, to enrollment, all the way to making carrier payments. Trovia simplifies the entire process for employers, eliminating recurring HR tasks and the paper trail usually required to accomplish these administrative tasks. Trovia’s “intelligent portal” allows employers to compare all available benefit plans online (including major medical, dental, vision, disability income and life insurance) and select the options that fit their employee group plan needs. Employees are empowered to self-enroll electronically, taking another administrative task out of the hands of their employers.
In addition to time saved, employers can see an overall cost savings of anywhere between 20-60% after enrolling their employees in Trovia. One reason for the cost savings is because the individual market is driven by rates that aren’t affected in the same way group plans are by individuals’ (or their families’) potential health events. ICHRAs also provide employers the flexibility to set the contribution rates and avoid the annual rate hikes that are often associated with traditional group plans, providing budget control year after year. Adopting a defined contribution approach does not necessarily mean greater cost shifting or changing the benefits offered to employees. Rather, it is an opportunity to show employees exactly how much money is being contributed to the monthly health insurance premiums and that they have the choice in how to best spend it, driving costs savings for both employers and employees.
Trovia is open to employers with two or more employees. There are no participation requirements to meet; an employer cannot be denied by an insurance carrier because of low employee enrollment. There are also no minimum or maximum contribution requirements with an ICHRA: the contribution can be as little or as much as the employer wants it to be. Different contribution allowances may also be offered to different employee classes. Additionally, when properly structured, an ICHRA can help employers avoid both the large “A” penalty (in 2021 that’s $2,700 per employee after the first 30 employees), and the smaller “B’ penalty for “affordability”.
Trovia manages payments just like other traditional group health plans. Employers receive one monthly consolidated bill for all employee plans, withhold the employee portion from their pay, and make one pre-tax payment to each carrier for all employees. Trovia also takes care of collecting and then directing premium payments to each carrier.
Trovia Employee Benefits
Trovia opens the doors to all available health plans, allowing employees the opportunity to shop for coverage that’s tailored to their specific needs. Trovia’s online process for comparing and selecting coverage and enrolling online as an employee is just as easy as it is for employers. It also provides a tax advantage, because the employer reimbursements don’t count toward their taxable wages and the employee’s portion of any premium balance due are payroll deducted on a pre-tax basis. Another benefit is that individual healthcare coverage is portable, if an employee leaves the company, they can take their insurance coverage with them.
A simple metaphor is to think of Trovia as a 401(k), while a traditional group plan is a pension. 401(k)s are tailored to what the employee wants to contribute, and the options they want in their portfolio. With a pension, on the other hand, employers choose securities for them.
Here’s how Trovia works from an employee’s perspective:
- Employees access a consumer friendly, personalized benefit portal to shop and compare all available individual health plans
- Employees select a plan and complete the online enrollment process using eSignature protocol
- The employer contributions are applied directly to the monthly insurance premiums of the plan selected by the employee
- The remaining premium balance due is taken care of via pre-tax payroll deduction with no reimbursement submission required
Trovia provides an exciting glimpse into the future of healthcare, while existing as a very real solution today. Traditionally, in the group insurance market model (sometimes referred to as a defined benefit approach), employers select a one-size-fits-most group plan and employees are limited to the options their employer chooses. Because ICHRAs are centered on a reimbursement model (sometimes referred to as a defined contribution approach), Trovia gives employers greater control over costs and provides the freedom of choice to employees.