Benefitfocus Announces Plan to Support Implementation of ICHRA for Employers, Medical Carriers
New health benefit for employees offers individual health plans with employer-funded reimbursement
Charleston, S.C. – February 12, 2020 – Benefitfocus, Inc. (NASDAQ: BNFT), a leading cloud-based benefits management platform and services provider, today announced its plan to support the implementation of individual coverage health reimbursement arrangements (ICHRA), which launched earlier this year. ICHRA, a company-funded, tax-advantaged health benefit used to reimburse employees for personal healthcare expenses, was made available to employers on Jan. 1, 2020.
Under new rules released by the Departments of Labor, Health and Human Services, and the Treasury, employers can offer a new “Individual Coverage HRA” as an alternative to traditional group health plan coverage, subject to certain conditions. ICHRAs can be offered by employers with more than 50 employees, as well as those with smaller workforces. If they choose to do so, they will then have 11 “classes” of employees, as determined by government regulations, from whom they can determine who will be offered ICHRAs. Each class of employee can only receive either the group plan or an ICHRA. ICHRAs can be used to reimburse premiums for individual health insurance chosen by the employee, among other medical care expenses. There are no limits to employer contributions with ICHRAs as compared to previous HRAs.
“Used properly, ICHRA-funded medical coverage provides employers a new and unique opportunity to offer health benefits at a predictable cost, with minimal administrative overhead. As an additional reward, this could have a significant positive impact on recruitment and retention of top talent,” said Ray August, President & CEO of Benefitfocus. “But for this to happen, employers and insurance carriers will have to rely on a company with experience in managing both group and individual benefit offerings. Since our platform connects the entire benefits ecosystem, we look forward to helping employers and their carrier partners leverage this new plan design.”
Benefitfocus is uniquely positioned to service this market by:
- Providing solutions and capabilities for all carrier market segments, including group, individual, and state
- Supporting employer enrollment and administrative services
- Integrating the broker, carrier, employer, and consumer roles into its solutions
- Assisting migration of a consumer from one market segment to another
- Enlisting artificial intelligence (AI) to provide the informed decision support for consumers to make appropriate decisions for their families both now and in the future
- Allowing consumers to supplement a benefit with affordable and diverse voluntary products.
Benefitfocus plans to provide the necessary offerings and customer service to support ICHRA implementation as part of its support for open enrollment later this year.
What is ICHRA?
The stated goal of ICHRAs is to promote employee and employer flexibility. Employers will provide healthcare benefits to their workforce, but in ways that reduce costs. Because the reimbursements provided to employees do not count toward the employees’ taxable wages, ICHRAs extend basically the same tax advantage as traditional group health plans.
Employees will have the ability to choose a benefits plan that specificially meets their needs, receive reimbursement for their medical care expenses (and sometimes those of family members) up to a maximum dollar amount that the employer makes available each year. The employer can allow unused amounts in any year to roll over from year to year.
The federal government projects that it will take employers up to five years to adjust to the new rules, but they then anticipate greater adoption of ICHRAs as compared to prevous HRAs. The government estimates approximately 800,000 employers will offer ICHRAs to pay for insurance for more than 11 million employees and family members, following the full phase-in of the program.
What ICHRA means to employers
Employers of all sizes will have additional flexibility in providing a “total compensation” package to their employees. But these planning opportunities will present challenges: the need to oversee both group plans and ICHRAs, integrate ICHRAs into the various chosen classes of workers, track employer contributions and employee activity, and administer the process.
Benefitfocus eliminates the need for a platform choice between group and individual plans, since it manages both. It can also provide shopping options for employees and various health plans.
What ICHRA means to carriers
Carriers will now be asked to navigate different paths with their employer customers, who may choose to make ICHRAs available to some employees, while maintaining group plans for others. Benefitfocus solutions can facilitate the migration of a consumer from a group plan offering to a carrier’s individual plan offerings, greatly increasing the potential for member retention at the time the ICHRA is implemented. Its individual marketplace provides robust decision support to assist a consumer in selecting the correct plan for their family, whether it be an off-exchange plan or an on-exchange plan via Enhanced Direct Enrollment.
Helping the consumer navigate to the optimal individual medical plan heightens the adoption of the ICHRA approach by the employee. In an effort to support our carrier partners in their strategic initiatives to maintain a member for life, once an employee adopts the ICHRA and enrolls in an individual policy, the platform also facilitates the portable nature of the product by allowing the member to have access to their carrier and their plan through the same platform, even in the event of a change their employer or employment status.
“ICHRA is just part of a variety of options carriers will have to incorporate into their portfolio as they give consumers access to the benefits they need to improve their lives, no matter how they work, where they work, or if they work at all,” August added. “Carriers and employers need one solution to meet these diverse needs and we are uniquely positioned to serve them.”