Myth vs Fact: Top 9 Broker Misconceptions about ICHRA
It’s not surprising that a relatively new benefits solution that was created on regulatory rules in a confusing industry comes with its fair share of misconceptions. We’re here to debunk those.
As a reminder, Individual Coverage HRAs (ICHRAs for short) allow companies to reimburse their employees for health insurance tax-free rather than buying it for them. The result? More cost control and flexibility for employers and more personalization and choice for employees.
Top ICHRA Myths, Debunked
Myth: My client’s group plan does everything for me, sounds like I’ll be managing everyone’s insurance plan on ICHRA.
Fact: We manage everyone’s insurance enrollment in house! Not you. Onboarding? That’s us, too. If your clients have questions? We have a support team for that. You can choose to be as involved or as hands-off as you want.
Myth: I don’t want to sell ICHRA because I won’t make any money like I do with group plans and Take Command might cut me out of the picture.
Fact: We view brokers as trusted partners because they play a pivotal role in helping companies solve their benefits challenges with ICHRA. We offer comparable commissions and value what brokers bring into the equation. We couldn’t do it without you!
Myth: “Is this the same as Obamacare? I heard that’s not good insurance. ICHRA sucks because the individual market sucks.”
Fact: While there used to be some truth to the quality of individual health insurance plans, that’s simply not the case anymore. Premiums have stabilized (along with MLRs), state-level reinsurance programs have spurred further market strength, each state has an average of five insurers to choose from—with many carriers expanding footprints, and, according to Ideon, rates for individual plans are lower than their small group equivalents in roughly half the country.
It’s high quality health insurance, many options with zero dollar deductibles, free telehealth or wellness incentives, that covers pre-existing conditions as well as 10 essential health benefits.
Myth: ICHRA is only for small businesses.
Fact: Large employers are actually the fastest growing segment we’re tracking with ICHRA signups. We’ve seen a 210% increase in large employers, ranging from 50 to 1,000+ eligible employees, signing up for ICHRA.
Myth: Can’t we self administer this?
Fact: Trust us. This is not a DIY scenario. Administering HRAs without a proper administrator is a lot of work, with various (expensive) pitfalls. Collecting medical receipts would violate privacy and more specifically, HIPAA, and the potential penalties would be large (envision if the HRA was considered invalid and all of those taxes were owed!). Those receipts also have to be securely stored for seven years.
Myth: Isn’t this like other HRAs that we’ve seen in the past?
Fact: HRAs have been around a long time, but there are two new models—QSEHRA, which was introduced in 2017 for small businesses, and ICHRA, which was introduced in 2020 to companies of all sizes. Both differ from traditional HRAs in that they can’t be offered in addition to a traditional group plan and they reimburse for individual insurance premiums, not just medical expenses.
Myth: Switching to ICHRA can’t be worth the pain.
Fact: Change is hard! You’re right. But with the right HRA administrator, we can help with change management, consensus building, onboarding, and continued support. With our industry-best renewal rate of 90%, our clients aren’t looking back (and our broker partners keep sending leads our way).
Myth: The ideal ICHRA client has low participation, low wages, high turnover, and carve outs.
Fact: ICHRA isn’t here to solve a problem, it’s an innovative strategy and quality solution worth looking into. A full ICHRA replacement might be the best choice for your client. It’s not just for the few employees out of area or restaurant and hospitality groups with lots of eligible employees (but high turnover and low participation that skews affordability).
Myth: I will use the ICHRA until I can get my client on a group plan.
Fact: ICHRA shouldn’t be a last resort! In fact, in certain situations it’s the model of choice. Be the hero and save your client money. Most save an average of 15% right off the bat; some save millions in their first year alone.
