Are you taking advantage of the most significant change in the healthcare market since the Affordable Care Act?

Often when there is a change in the healthcare marketplace, it’s widely talked about. However, in 2019 there was a significant change in the healthcare insurance market that took place quietly, yet it will have a profound impact. On June 13, 2019, the U.S. Departments of Health and Human Services, Labor and the Treasury issued a final rule allowing employers of all sizes to fund a new kind of health reimbursement arrangement (HRA), known as an Individual Coverage HRA (ICHRA).

An ICHRA allows employees to purchase individual coverage through their employers using pre-tax employer and employee dollars. Employers may offer an ICHRA or traditional group insurance, but they cannot offer a choice between the two. Employers that do offer an ICHRA must treat all employees in the same class in a similar manner; they can, however, offer group insurance to one class of employees and an ICHRA to another. 

You may be wondering why this matters. ICHRAs impact the healthcare market in two significant ways:

  1. Employers can now monetize healthcare benefits, provide their employees with access to quality health care, and focus their efforts on their business rather than health insurance. In the future, employers will offer their employees a contribution to their premiums, access to coverage, access to education and consulting services, and a premium collection service. No more agonizing decisions over plan designs.
  2. Employers can remove the risk variable from their balance sheets. With the advent of ICRHAs, an employer’s maximum cost now becomes the individual marketplace. For example:
    1. Employer A has a current annual premium of $1,500,000 (employer and employee) and was looking at a 12% increase for 2020 ($180,000). The individual option for the same plans came in at $1,400,000, a savings of $280,000.
    1. Employer B has a current premium of $1,000,000 with an 8% increase. The individual option came in at $1,300,000, a $220,000 increase. They should stay with the group plan.
    1. Employer C had a $2,000,000 premium and was hit with numerous shock claims resulting in a 38% increase. The individual option capped their premium at $2,100,000, a $660,000 savings.

Employers should look at all options and engage consultants to determine what makes the most sense for their business. For questions or help navigating these changes, feel free to reach out to us at or give us a call at 585-248-5870.