Individual coverage health reimbursement arrangement, or ICHRA, is an alternative to group health plans for small business healthcare. This arrangement allocates $100 a month per employee that companies put toward individual coverage on the open insurance market. They can either be used to pay insurance premiums or cost-sharing to get the overall price of the policy down.
This could be a viable route for small businesses who feel the price point of a group insurance plan is too expensive for them at this time, but still want to offer their employees help with health insurance. The $100 a month reimbursement does not count as taxable income, so the person receiving the benefit can use it in full. ICHRA’s act as a sort of middle ground between ACA and group plans. For people who earn income that is higher than ACA qualification, this would be a viable option if they are working at a smaller company that elects not to offer said group plan.
However, it could leave employees with a more involved enrollment process and healthcare that isn’t as good as it would be under a larger group plan.
“This is a way to offer a lower premium option to some employers, but with the consequence of increasing premiums in the individual market and costs for the federal government via higher premium tax credits,” Matthew Fiedler, economic studies at USC-Brookings said.
Larger employees are not too keen on the new rules at the moment, as it would be more cost-effective for them to still roll with the group plan rates.
All in all, this rule put into effect by the Trump administration could benefit small businesses who do not have health plans for their employees, but would like to assist in them getting it. While it could complicate things such as the enrollment and reimbursement process, at the end of the day it could end up saving people thousands of dollars if they use the plans in the right way. While different from ACA, it still offers individual plans to choose from allowing the consumer to pick the one that is best for them at that given time.
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