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What’s The Buzz? Have You Heard About ICHRA Plans?

November 25, 2024/by The Ark Insurance Team

“ICHRAs are designed to give employers flexibility when offering a group health plan.”
~ Rebecca Yates, CEO of Ark Insurance Solutions

Individual Coverage Health Reimbursement Arrangements, most commonly known as ICHRA plans, have become increasingly popular in some areas as a flexible alternative to group plans. And since they represent a significant shift in how businesses approach health insurance, they’re worth knowing about.

ICHRA plans are relatively new. First introduced in 2020, they’ve gained some traction among businesses looking for an affordable group health insurance option. But, like anything else, ICHRA plans also come with potential drawbacks. Depending on what state you’re in, how many employees you have, and the overall health of your group, an ICHRA plan might not be the best option for you.

If you’re a business owner looking at alternative health plans like ICHRA, we recommend getting an in-depth analysis with a trusted professional. While they can be particularly advantageous in states like Alaska, they aren’t so much in Utah — the nuance of which we’ll discuss below.

What exactly is an ICHRA plan?

In a nutshell, ICHRA plans allow employers to reimburse their employees for individual health insurance premiums and qualified medical expenses, and the reimbursement is completely tax-free. Rather than selecting and managing a one-size-fits-all group health plan, businesses can provide employees with a predetermined amount of money each month. Employees then use that money to purchase an individual health insurance coverage on the marketplace that best fits their specific needs.

Think of an ICHRA as essentially creating a personal expense account for each employee’s healthcare needs. When employees incur medical expenses or pay their individual insurance premiums, they can submit receipts for reimbursement up to their allowed amount. This arrangement offers a fair amount of flexibility, while still providing the same tax advantages that are typically associated with employer-sponsored health benefits.

Where ICHRAs shine

For some companies, ICHRAs present an attractive option, because they solve some of the most common challenges among business owners in providing adequate health benefits. This kind of control is valuable for growing businesses or those operating across multiple states.

ICHRAs also get rid of the administrative burden of managing a group health plan. No more annual renewal negotiations, plan design decisions, or employee enrollment periods. Instead, companies just have to decide what the employee reimbursement amounts will be and process employee receipts — this is something they should delegate to third-party administrators.

This arrangement can work pretty well for companies that have a diverse workforce spread across several states. Rather than trying to find a single group plan that satisfies everyone, employees can select the coverage that matches their needs. A young, healthy employee might choose a high-deductible plan with lower premiums, while an employee managing a chronic condition might opt for more comprehensive coverage.

“It’s not uncommon for an employer to come to us and say, ‘I have people in 20 states. How do I possibly build a group health plan for them?’ And often ICHRAs are the answer.”

Despite their advantages, ICHRAs aren’t without potential drawbacks. And much of this depends on what state your business and employees are operating in. The success of an ICHRA program directly correlates with the strength of the individual insurance market in your area. So, if you take Utah for instance, the state has a much more affordable group market with excellent benefits, which ICHRA can’t compete with. It’s likely that employees would struggle to find better coverage with their ICHRA allowance. But in Alaska, ICHRA plans often present a more beneficial choice.

Whether or not ICHRA is a good idea can also come down to the number of employees your business is supporting. If a large employer with more than 50 employees can’t get enough people to enroll in a group plan, or if that plan is somehow canceled by the carrier, they could potentially use an ICHRA as an affordable option.

“ICHRAs tend to be better for those large employer scenarios where they’re trying to be compliant because now they’re going to get penalized if they’re not offering, but they can’t find a good way to offer,” says Rebecca Yates, CEO of Ark Insurance Solutions. “They can be a good alternative for businesses that have a hard time meeting participation.”

Employee education represents another challenge to the overall effectiveness of an ICHRA plan. Many workers are familiar with traditional group health insurance but they might find the individual market confusing. They’ll need guidance on selecting appropriate coverage, understanding how reimbursements work, and managing their healthcare spending.

Some employees might also miss the simplicity of having their employer choose their health plan. While flexibility can be helpful, it also means employees must take more active roles in their healthcare decisions. This responsibility can feel overwhelming, especially for employees who have never had to shop for health insurance before.

Tax advantages

ICHRA does have its tax advantages, with reimbursements that are tax-deductible for employers and tax-free for employees. This is a significant benefit compared to simply providing extra salary for healthcare expenses. It allows businesses to provide health benefits with the same tax advantages as traditional group coverage but with greater flexibility and often lower administrative costs.

ICHRAs can also help businesses better control their long-term healthcare costs. Unlike traditional group plans, where premium increases are the norm, employers can adjust ICHRA allowances based on their budget and business performance.

“We can have you give a dollar amount to each employee, have it come out with a pre -tax benefit, and then those employees can use that money to buy a plan that works for them in their area.”

Choosing ICHRA

When it comes to implementing an ICHRA plan, you need to carefully plan and provide clear communication and assistance for your employees. This isn’t a decision to enter into lightly, and you shouldn’t do it without a broker. If your business has less than 50 employees and they aren’t making high salaries, it may be smarter to allow them to qualify for federal subsidies through the ACA marketplace instead. Because there are so many caveats to an ICHRA plan, it’s best to get help from a knowledgeable professional.

When choosing an ICHRA plan, businesses need to determine appropriate reimbursement amounts for different employee classes, making sure these amounts give employees the ability to purchase adequate coverage. They also need to establish clear policies surrounding eligible expenses and reimbursement procedures.

“Most brokers are only comfortable with group or individual plans. But at Ark, we’re well-versed in both of these options and can help you find what best fits your business,” says Yates. “It’s important to get an analysis from someone who knows what they’re doing and is established in your area.”

Making the decision

Whether an ICHRA makes sense for your business or not depends on a variety of factors, like your workforce demographics, local insurance market conditions, and administrative capabilities. A thorough analysis from Ark will look at your current health benefit costs and challenges, and compare those against projected ICHRA expenses. We consider everything, including the reimbursement amounts and administrative costs of the plan. It’s also important to think about your employees and their preferences. You may want to take into account the overall health of your group and their potential needs when it comes to healthcare. At Ark, we take every factor into consideration.

As healthcare costs continue to rise and workforce needs evolve, ICHRAs represent a new approach to employee health benefits that may be helpful in certain states and/or situations. While they may not be the perfect solution for every business, they present a compelling alternative worth considering.

For businesses struggling with traditional group health insurance or seeking more predictable benefit costs, ICHRAs can be worth looking into. However, they still require careful planning. In the right use cases, ICHRAs can create a win-win situation – providing employees with the health benefits they need while giving employers greater control over their healthcare spending.

Want to see which plans might best fit your needs? Click here to schedule an appointment with an Ark Insurance Solutions agent.
Navigating the complex world of health insurance can be daunting. The Ark Insurance Solutions team has the skill and experience to guide you. We’ll help you compare health plans to make the best decision based on your unique circumstances and budget. Give us a call at 801-901-7800 or click here to schedule an appointment with us.

Small Business Owners: With a Limited-Time Waiver, You Can Offer a Group Health Insurance Plan for Your Team at No Cost to You

November 22, 2024/by The Ark Insurance Team

If you’re a small business owner and you’ve been waiting to offer a group health plan, now might be the perfect time. Until December 15th, the U.S. government has waived the Minimum Participation Rate (MPR) requirement as well as the minimum contribution requirement. This temporary waiver aims to make it easier and more affordable for employers with 2 to 50 employees to get health insurance coverage for their team.

In Utah, the Minimum Participation Rate (MPR) is generally 75%, which means that without this waiver, 75% of your eligible employees would have to enroll in a health insurance plan you are providing for you to offer insurance. But here’s how the waiver helps. Even if you have 50 employees, with the waiver, you would only need two employees who wanted to sign up for health insurance to make it work.

During the rest of the year, employers are required to pay for a certain portion of their employees’ health insurance. During the waiver period, employees can configure the arrangement so that each employee pays 100% of the cost for their own health insurance. So, even if in the past providing health insurance to your employees seemed out of reach, during this special window it might just be possible.

If your company wants to take advantage of this special waiver, it’s important to understand that it takes a few weeks for a health insurance agent or broker to help you explore plans, choose a plan, enroll in the plan, and get all the paperwork signed and accepted by the carrier. Since all paperwork must be signed and accepted by December 15, 2024 (with coverage beginning January 1, 2025), you should book an appointment with an agent now.

Want to see which plans might best fit your needs? Click here to schedule an appointment with an Ark Insurance Solutions agent.

Not Insurance: Health Share Plans Could Leave You Unprotected

May 27, 2024/by The Ark Insurance Team

Health share plans and healthcare sharing ministries (HCSMs) are often marketed as “cost-effective alternatives to traditional health insurance.” However, as some Utahns are finding out, these plans have substantial limitations on coverage and lack the protections that ACA-approved health insurance plans provide.

If you’ve ever researched healthcare plans for yourself or your family, you know firsthand that searching for and comparing plans can be confusing—really confusing. There are so many different plans, pricing tiers, subsidies, and sign-up windows—the whole experience can be overwhelming. If you don’t know how to apply for subsidies made available through the Affordable Care Act (ACA), the cost of coverage can also seem impossible.

During your search for coverage, you may have encountered programs called health share plans or healthcare sharing ministries (HCSMs). These plans appeal to the human desire to be part of a community of people with similar beliefs and values. Members of HCSMs “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs.”

A report from the Colorado Division of Insurance found that more than 1.7 million Americans rely on sharing plans and that many of the plans require members to ask for charity care before submitting their bills.

-First Annual Report on Health Care Sharing Plans and Arrangements from Colorado Division of Insurance, May, 12, 2023

Both health share plans and healthcare sharing ministries plans are touted as affordable alternatives to traditional health insurance—and it’s true that monthly premiums are sometimes lower than health insurance plans. However, the reason the premiums are lower is alarming: Health share plans and healthcare sharing ministries plans are not insurance plans. They don’t provide essential coverage and benefits and don’t have to meet the minimum health benefits mandated by the Affordable Care Act.

Unlike regulated insurance companies, health share plans and healthcare sharing ministries are not required by law to pay their members’ claims for medical expenses.

Choosing a health share plan over an ACA-compliant health insurance plan can have profound, negative implications on your access to healthcare. No one plans for a severe illness, injury, or medical emergency, but if you choose a health share plan instead of insurance, there’s a good chance it won’t be covered. If you have a serious illness, it’s also very possible that the cost of your care exceeds the annual limit (the cap on the amount the health share will pay in a single year). There are thousands of documented cases of Americans with health share plans who ended up with a severe illness or injury, only to find themselves up a creek without a paddle.

Let’s dive in and cover a bit more about why you should avoid these plans, and how a health insurance plan through the Health Insurance Marketplace is the better alternative.

How Do Health Share Plans Work?

Health share plans and healthcare sharing ministries operate on the premise that members of the plan pool their money to cover each other’s medical expenses. Members typically pay a monthly “share” or contribution, and those contributions are used to pay the medical costs of other members who file claims.

Don’t Be Fooled. Health Share Plans Are Not Health Insurance

Some health share options offer free co-pays or coverage for specialty appointments, but when it comes to your health (which is affected by your insurance coverage) it’s important to look farther down the pipeline. Here are some crucial differences between health share plans and health insurance.

Health share plans aren’t regulated: Traditional health insurance plans are regulated by state insurance departments, while health share plans aren’t. Health share plan providers aren’t subject to the same oversight, consumer protections, or legal requirements as health insurance companies. As a result, health shares have fewer guarantees regarding coverage, claims processing, and dispute resolution. Often, these limitations are buried in the fine print. According to the Utah Insurance Department’s own website, when it comes to these plans “Don’t expect coverage for pre-existing conditions, mental health, or other needs.”
Limited coverage: Health share plans impose restrictions on coverage. Pre-existing conditions, preventative care, and medical treatments (like cancer treatment) aren’t fully covered. Coverage varies based on the plan you’re on, and the preferences of the health share’s members.
“Morality” as a litmus test for coverage: Many healthcare sharing ministries have a morality clause that requires members to adhere to specific religious or lifestyle guidelines to qualify for a plan. This often leads to a denial of coverage for conditions that are connected to activity or behaviors the administrators of the plan deem as “immoral.” This often includes treatment of STDs, treatment of alcohol or drug abuse, cirrhosis of the liver, or maternity benefits for anyone who is unmarried and pregnant.
No guarantees: Health share plans operate voluntarily and rely on the willingness of members to contribute to the shared pool of money. There are no guarantees there will be funds to cover all the members’ medical expenses, especially when there is a large-scale healthcare crisis (like COVID-19) or an unexpected financial hardship among members (such as a recession).
No provider network and lack of negotiated pricing: If you do find yourself paying out of pocket for your medical expenses that weren’t covered by a health share plan, there’s another unwelcome surprise waiting for you. Since health share plans don’t have provider networks, you’ll likely be charged full price by the doctors and hospitals, instead of the lower, negotiated rates available to people covered by health insurance. To add insult to injury, some plans require the patient to try to negotiate a lower price for services directly with the doctor or hospital before submitting a claim. Some even have you pay the bill and then request reimbursement.

Real-Life Consequences: A Short Case Study

In 2019, Salt Lake City’s Jennifer Wunderlich received some terrible news. Her daughter was diagnosed with a rare form of cancer and needed to start life-saving treatment immediately. Unfortunately, Jennifer’s family was enrolled in a health share plan, which she believed was the only option her family could afford, based on the perceived cost of health insurance. Jennifer contacted her health share plan, and they informed her they would only cover up to $100,000 of her daughter’s cancer treatment. Since her daughter was going to need almost 18 months of care and Jennifer would not be able to work during that time, it was looking like the Wunderlich family was also headed for financial ruin. Even worse, the health share plan would likely only cover the first few weeks of her daughter’s cancer treatment. The doctors recommended that Jennifer transfer ownership of their family’s home to one of her younger children through a trust. While it’s devastating to hear your child has cancer, learning that your “insurance” won’t cover the cost of treatment is an additional, unfathomable blow to anyone.

Luckily, Jennifer was friends with Rebecca Yates, CEO and Founder of Ark Insurance Solutions, a Salt Lake City-based health insurance brokerage. Based on Jennifer’s family income, Yates was able to sign her up for an affordable health insurance plan through the Health Insurance Marketplace. With subsidies, the health insurance plan was only $16 a month, substantially more affordable than the $450 per month Wunderlich was paying on her health share plan. The new coverage (which was actual health insurance) covered the cancer treatment, and her daughter received the life-saving healthcare she needed. Here’s what Jennifer had to say about the experience:

“Rebecca was able to find a plan that gave us the coverage we needed because we knew this would cost upwards of one million dollars. She was able to lay it out for us, and let us know what would be the best option. It changed everything. We had to go to have proton beam radiation done, which isn’t offered in Utah. So we were able to go to MD Anderson Cancer Center in Houston, and we spent the summer there while [my daughter] had her treatments and underwent other surgeries. We wouldn’t have been able to afford that had we not had insurance coverage. So it literally saved her life.”

Prioritize Your Health With Real Insurance

The significant risks and limitations of health share plans can negatively impact your access to health care. Having good health insurance coverage is critical to getting the best care. The good news is that quality health insurance can actually be affordable when sourced through the Health Insurance Marketplace, which offers subsidies and pricing tiers based on your income.

Since health insurance brokers’ fees are paid by the insurance carriers, you can get the help of a health insurance broker or agent at no additional cost. This empowers you with a professional who can advocate for you, evaluate your coverage needs, and help you find the plan that best suits your family’s budget.

Want to learn more about what type of quality health insurance coverage you can qualify for? Ark Insurance Solutions can help. Let’s talk!
Navigating the complex world of health insurance can be daunting. The Ark Insurance Solutions team has the skill and experience to guide you. We’ll help you compare health plans to make the best decision based on your unique circumstances and budget. Give us a call at 801-901-7800 or click here to schedule an appointment with us.

News

A report from the Colorado Division of Insurance found that more than 1.7 million Americans rely on sharing plans and that many of the plans require members to ask for charity care before submitting their bills.

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