By JoAnn Volk, Kevin Lucia, and Sloane Daly
Individual Coverage Health Reimbursement Arrangements (ICHRAs), recently rebranded as CHOICE Arrangements, were established by a 2019 rule that allows employers to offer employees an employer-funded account to purchase health coverage on their own rather than provide a traditional group health plan. Federal legislation to incorporate the option in law, a planned update to the federal rule, state efforts to encourage enrollment with small business tax credits, and a growing number of ICHRA administrators to help employers design, implement, and administer ICHRAs reflect growing interest in expanding adoption of ICHRAs. At the same time, recent federal policy changes have made coverage in the individual market more costly, undercutting the primary reason employers are looking to ICHRAs.
With funding from the National Institute for Health Care Reform, Insights from a Multi-Stakeholder Study of Individual Coverage HRAs: Considerations for Employers and Employees synthesizes perspectives of 32 stakeholders across the evolving ICHRA ecosystem to provide insights into employers’ and employees’ experiences with ICHRAs. Key findings from the brief include:
- The business ecosystem supporting the ICHRA model is growing in the number of entities working with employers to make the transition and in the services they provide.
- Despite significant investment, overall ICHRA uptake among employers is limited and primarily occurring among small employers.
- Cost is the primary consideration for employers offering ICHRAs that make it easier for employers to lock into a level of spending with predictable increases going forward.
- ICHRAs give employees a greater choice of plans but may come with uneven coverage and financial impacts.
- Some stakeholders see further embrace of ICHRAs but administrative barriers and recent spikes in individual market premiums may limit adoption.
Read the full issue brief here.
Support for this brief was provided by the National Institute for Health Care Reform.
