PeopleKeep released its report, What We’ve Learned In The First 90 Days Of The Individual Coverage Health Reimbursement Arrangement (ICHRA). The report looks at how employers throughout the United States have used the benefit in the first 90 days of its availability and compares key results to the qualified small employer health reimbursement arrangement (QSEHRA).
The ICHRA is a new health reimbursement arrangement (HRA) that enables employers to reimburse employees for individual health insurance premiums and out-of-pocket expenses. The new HRA became available January 1, 2020 to employers of all sizes. Unlike its sister, the QSEHRA, it does not have allowance caps and satisfies the employer mandate.
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“This report demonstrates that employers are not only willing, but prefer to offer more than the allowance limits that the government sets for the QSEHRA,” said Victoria Hodgkins, CEO of PeopleKeep.
According to the report, employers offering the QSEHRA in 2019 set average annual allowances at $3,360 for single employees and $4,956 for employees with a family. In comparison, employers offering the ICHRA set average annual allowances at $5,971 for single employees and $12,892 for employees with a family.
Additional key findings from the report include:
- There is a near-even split between employers who choose to use the ICHRA to solely reimburse insurance premiums and those who expand the benefit to include out-of-pocket expenses
- The most common out-of-pocket expenses employees submitted were medical office visits, prescription drugs, and chiropractic care
- The three most commonly used employee classes are full-time salaried, full time, and salaried
- The average opt-in rate is 75%, while 25% opted out of participating in the ICHRA benefit, likely to take advantage of premium tax credits
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“Hundreds of employers throughout the United States are now offering the brand new benefit through PeopleKeep, and employees are engaging at a high rate,” said Hodgkins. “Looking ahead, we are confident that engagement will only increase as employees understand the health benefit better. And although there is room to improve some of the regulatory issues, such as the 90-day advance notice requirement, the ICHRA has some good early traction and can only get better.”