ICHRA vs. Group Plans: Which is better?
Is ICHRA better than a traditional group plan?
In many cases yes.
This innovative health insurance model is a superior option compared to traditional employer based group health plans for many reasons. The impact for each employer will depend on local market factors, and prioritization of health benefits.
An Individual Coverage Health Reimbursement Arrangement or ICHRA, is way for employers to reimburse their employees tax free for health insurance premiums and eligible medical expenses.
The following chart provides a comparison of a traditional group health plan to an ICHRA:
| ICHRA | Traditional Group Plan | |
| Cost | Define a benefit budget and stick with it. No more surprise increases year after year. | Group plans have less predictability, and require a minimum employer contribution. |
| Plan customization | Employer sets contribution limits and allowable expenses. Employees choose an insurance plan that is best for them. | Employers must preselect plans from one insurance company to fit the needs of their team. |
| Network Flexibility | Employees can save money by choosing an individual plan with a narrow network that includes their doctors. | Employers generally choose a group health plan with the largest network to accommodate all employees needs, which drive costs up for everyone. |
| Plan Portability | Employees insurance is not tied to the employer which provides continuity of coverage. | The plan stays with the employer after an employee leaves their place of employment. |
| Plan Choice | Employees select an individual plan that fits their needs. | Employees are restricted to the options you have selected from the insurance company. |
| Employee Experience | By owning their own insurance policy employees become better consumers and feel more empowered. | Employees rely on their employer to provide education and ongoing support to understand their health insurance. |
Pro-Tip: An ICHRA can be used alongside a group health plan by utilizing employee classes. For example, a group plan may be a better option for full-time employees, but ICHRA might make more sense for part-time employees. |
QUICK HITS: ICHRA benefits (vs. traditional group health plans)
- Minimizes the risks for employers
- More flexibility in employees plan section
- Simple and flexible plan design options for employers
- Set your budget and forget about annual rate increases
- No participation requirements
- ACA compliant solution for large employers
Ready to discuss your options? Contact Benafica
Employee benefit trends are constantly evolving requiring extra time and money to stay relevant.
Our team provides superior customer service, education to employers and employees, and ease
of administration with our proprietary software. If you would like to learn more about our HRA services, feel free to give our team a call today at 651-287-3253 or send us a message, and we’ll be in touch promptly.
