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ICHRA - Is it Right For You ?

Willis Towers Watson is expanding its product offering with the launch of individual coverage health reimbursement arrangement (ICHRA) solutions, including consulting services and program design.

ICHRA — which was made available to employers on Jan. 1, 2020 — is a newly formed plan under the Affordable Care Act. It is a company-funded, tax-advantaged health benefit used to reimburse employees for personal healthcare expenses.

“This is a way for employers to encourage their employees to shop for care, and to lower the total cost of the premiums of these plans,” says John Barkett, senior director of policy affairs at Willis Towers Watson.

With this new type of health insurance coverage, employees purchase their preferred plan on the individual market and receive a reimbursement through an employer-sponsored HRA. ICHRAs give the employee the choice of what insurance plan to buy, whether they want a low-deductible or high-deductible plan and which carrier to go with.

“It's putting the ball in the employee’s court,” Barkett says. “For most employers, it’s a daunting task to take a health plan that will be good for one household, let alone a full set of employees. Employers are going to want to offer their employees help as they transition into this new type of model.”

See also: What benefit managers need to know about HRAs in 2020

Willis Towers Watson helps employers decide if an ICHRA is right for their organization by using financial opportunity analysis, comparing the cost of individual insurance for employees to the cost of the current group health plan and conducting an individual insurance market assessment.

In addition, Willis Towers Watson provides employer subsidy management through HRA administration, while helping employers comply with new ICHRA reporting requirements.

Barkett describes ICHRAs as the 401(k) of health insurance, as it’s a good option for companies who may want to swap a one-size-fits-all group health insurance plan for a more personalized, defined contribution approach.

“There’s a similar type of idea here [to 401(k)s] — employees buy their own plan and the employer will help them do that,” he said. “The employer will then make sure that employees can afford it by putting money in an account, and they can use that money to reimburse themselves for the premiums they paid for this coverage.”

Evelina Nedlund  Associate editor, Employee Benefit News

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