Can ICHRAs Fill Small Businesses’ Health Coverage Gaps?

By Yasin Mohamud | Originally posted on PlanAdviser

A recent survey found nearly 90% of small to mid-sized employers shared concerns over whether they could provide group health plans. Could individual coverage health reimbursement arrangements be the answer?

Small to mid-size employers are facing a crisis of health care coverage, according to a recent survey by the insurance company eHealth Inc. A large majority (89%) of these employers said they were worried they will not be able to offer their employees’ health benefits in three years, due to rising costs and administrative burdens. Almost all (93%) respondents wanted a new health benefits solution because they felt sponsoring a group health plan was no longer feasible.  

Most respondents (75%) expressed interest in offering individual coverage health reimbursement arrangements, where employers contribute a fixed amount of pre-tax dollars to employees, who in turn use those funds to purchase Affordable Care Act-compliant coverage in the individual market.  

The survey also found that 66% of employers who were currently not offering group health benefits said, if given the option, they would contribute toward the cost of employee-purchased health insurance premiums. 

While respondents showed strong interest in the concept of ICHRAs, there seemed to be a lack of awareness about the actual program, as 54% said they were unfamiliar with ICHRAs.  

A total of 503 owners and managers of small to mid-sized businesses, with 500 employees or less, were surveyed in July.