This Labor Day, one of the best things an employer can do for their employees may be one that allows employees to do something for themselves: buying their own health insurance.
In a “everything old is new” twist, the next health insurance policy may be one that has been around for years. “Defined contribution” plans allow employees to purchase their own health insurance with employer contributions instead of enrolling in a “defined benefit” plan, a health insurance plan with benefits determined by the employer.
Ten years ago, experts predicted that rising health care costs and new health insurance market mechanisms may lead to an era of popular health care. Some argued that the time to make contributions in health insurance has arrived. It wasn’t like that.
Although there are obvious benefits—such as the opportunity for employees to find a plan that fits their specific needs and for employers to avoid spending money on high health insurance costs—insurance benefit plans are not widely available.
eHealth (NASDAQ: EHTH), an online health insurance marketplace, hopes to change that this time. The company he announced last week now offers Individual Health Coverage Reimbursement Arrangement (ICHRA) products in addition to traditional insurance plans.
The ICHRA is a new defined contribution system that allows businesses to set up fixed cash contributions for employees to use to pay for health insurance. Employees choose and purchase their own health insurance plans and the employer (or third-party provider) reimburses the employee for the agreed-upon premiums. This amount is tax-free for qualifying items, such as monthly insurance premiums and premiums.
Any company can offer an ICHRA but it can be especially attractive to smaller companies that want to offer health benefits but can’t afford it. Especially in a stable labor market within the Great Resignation, ICHRA can help employers compete with workers in a reliable and predictable way.
There is no maximum contribution for employers under the ICHRA, and all employees can participate in the ICHRA plan, including part-time employees who may not be eligible for health benefits in most companies. Employees who have not met the waiting period to be eligible for benefits can participate in the ICHRA scheme.
For workers, ICHRA represents a new way to get help paying for health insurance, making health care easier and reducing financial stress and worry about medical costs. In addition, ICHRA helps employees move, because the employee can keep the plan if they leave their job, instead of being tied to a specific company for health coverage (which is amazing). lock function).
According to Anthony Lopez, senior manager of small business, family, and small business plans at eHealth, full-time and part-time workers who would otherwise not have access to health insurance premiums will benefit most from the ICHRA. But, he says, there are also more benefits that any employee can appreciate.
“If you’ve ever had employer-sponsored health insurance, you may remember being given one or two or three options to choose from. This can be overwhelming because everyone’s needs are different,” Lopez said. “ICHRA often allows you to choose between a number of options and find the best one that fits your needs and budget, while still being supported by your employer to reduce your monthly payments.”
Specific federal law The ICHRA regulations went into effect in August 2019, for health insurance plans starting on or after January 1, 2020. But according to Lopez, the ICHRA is just getting started.
“It took time for the relationship between the money and the insurance program to develop,” he said.
According to government statistics as of June 2019 (when the final ICHRA rule was published), more than 800,000 employers will be able to offer this, which will benefit more than 11 million workers and their families. The government also said that 800,000 previously uninsured people could get health insurance as a result.
While it’s too early to tell how accurate those shows will be, Lopez sees big growth in the future.
“Besides the lack of awareness of the ICHRA, there are no barriers to child transmission,” Lopez said.