The Driving Force Behind ICHRA’s Growing Popularity

In the past few years, Individual Coverage Health Reimbursement Arrangements (ICHRAs) have been a game-changer for employers and employees alike – and for good reason.

As quality health benefits will always be a priority for jobseekers and employees, many businesses appreciate the flexibility of contributing what they can to support their employees — without having to play the role of plan administrator or limiting the plan options. According to the HRA Council, ICHRA adoption has grown by nearly 350% since the offering was introduced in 2020.

But who exactly are ICHRAs a fit for?

So far, a lot of small and midsize businesses (SMBs). The HRA Council reports that 90% of employers offering ICHRAs have 20 employees or fewer, and the vast majority have fewer than 50. And of these employers, 85% have never been able to offer health benefits prior to these arrangements available through the marketplace. According to a KFF report, last year 99% of businesses with over 200 employees offered health benefits, whereas only 73% of companies with 25-49 employees offered health benefits, compared to just 58% of employers with 10-24 workers.

SMBs account for approximately 99.9% of companies in the United States. As the overwhelming majority, these businesses are in a prime position to help shape healthcare benefits for our country —yet they’re often faced with the most barriers and limited resources that hold them back. Without the ability to self-fund or access to truly innovative plan designs, SMBs are increasingly turning to more flexible options. HRAs and level-funding models are often attractive ways to offer competitive benefits, at sustainable rates and with measured risk. That’s likely why 13% of SMBs with 3-49 employees that offered health benefits in 2022 did so via ICHRAs and other similar cash contributions, according to KFF.

Even as they grow in popularity, ICHRAs are still an underutilized model for employers. For some, the perceived complexity or administrative burden is still a barrier. There are several considerations to navigate, from compliance to contribution strategies, marketplace support for employees to enrollment questions — especially for employers offering benefits for the first time.

Advising on this unique arrangement is critical in the years ahead.

The following are considerations heading into ICHRA conversations with employers:

Starting from square one — Many employers leaning into ICHRAs are offering health benefits to employees for the first time, needing external guidance to help them navigate contribution strategies and more, especially in the areas of compliance. 

Building a health benefits roadmap — From our discussions with Gravie clients, it seems many SMBs are currently utilizing ICHRAs as an “on-ramp” to health benefits. Having conversations now about a benefits program will set the stage for where employers may be heading in the coming years. Advisors can help these clients identify solutions for today, while supplying a roadmap for where they may ultimately want to be tomorrow.

Not just for SMBs — ICHRAs aren’t only for SMBs, and that’s where ongoing education and awareness may be helpful for larger organizations. Groups with a segmented employee base, especially those with a considerable part-time or temporary workforce, could be an ideal fit for a hybrid-model offering – for example, using ICHRAs for part-time staff, and a more traditional group health plan, such as Comfort®, for full-time employees. ICHRAs can also be a strong fit for:

• Employers seeking to lower or manage costs while expanding options for employees
• Groups that experience high employee turnover
• Groups having trouble meeting participation requirements
• Groups with consistently high or sizable renewals
• Groups that have employees in multiple geographic locations
• Small to midsize employers
• Groups new to offering benefits

Enlisting an administrator — Administrative partners are few and far between in this arena, and this is another place where Gravie stands out. Our administrative capacity ensures a smooth ICHRA process for all stakeholders at all stages. We’re making it easy for participating employees to shop for their plans with our user-friendly shopping platform and personalized application assistance. Our team also supports broker partners and provides a white-glove experience for employers, with specialists available every step of the way. Gravie even coordinates payments,pulling funds from the employer into dedicated bank accounts that are used to fund the plans. We facilitate automatic payments to the insurance carriers, and monitor members’ accounts to ensure there aren’t missed payments.

“We know that for some employers, the cost of traditional group health plans outweighs the value. Employers need more sustainable, affordable options – and Gravie ICHRA may be the perfect solution.”

Gravie ICHRA General Manager Andrew Reeves

Interested in offering health benefits via Gravie ICHRA? Check out our Gravie ICHRA eBook.