For many, the shift from traditional group health plans to Individual Coverage Health Reimbursement Arrangements (ICHRA) might raise some concerns and questions. But, what if we told you that ICHRA doesn’t just fill the shoes of group health; it actually outperforms it in several key areas? ICHRA offers a flexible and personalized way to manage your health coverage.
Why Group Health Insurance is No Longer the Best Option
With group health insurance, your employer provides you one plan that covers all employees. The employer covers part of the premiums, while you pay the rest. Employees don’t have a choice–the plan is the same for everyone, regardless of individual needs or preferences.
What is ICHRA?
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. Instead of offering a one-size-fits-all plan, your employer gives you a fixed allowance each month. Your employer will apply that money toward any individual health insurance plan that YOU choose. If there is a difference between your employer’s contribution and the premium of the plan you chose, you pay the difference through payroll deduction.
Key Differences: Group Health Insurance vs. ICHRA
More Plan Choices
Group Health Insurance: Limited options, usually just one or two plans, and everyone gets the same coverage.
ICHRA: You get to choose from a wide variety of individual plans available in your area. This means you can select a plan that best matches your personal healthcare needs.
Cost Control
Group Health Insurance: Your employer sets the premium contributions, and your cost depends on the group’s plan. You might end up paying for features you don’t need.
ICHRA: You control the cost by choosing a plan that fits your budget. If you find a cheaper plan, you can keep the leftover allowance for other eligible healthcare expenses.
Flexibility
Group Health Insurance: Your coverage is tied to your employer’s group plan. If you change jobs, you lose that coverage, and COBRA can be costly.
ICHRA: Your individual plan goes with you, even if you change jobs. It’s your policy, and you can keep it if you move or switch employers.
Customization
Group Health Insurance: Everyone has the same deductibles, copays, and network of doctors, which may not always work for your specific situation.
ICHRA: You can choose a plan that fits your preferences, whether it’s low deductibles, specific doctors, or prescription coverage you need.
Tax Benefits
Group Health Insurance: Your premium contributions are pre-tax, reducing your taxable income.
ICHRA: Your employer’s contributions don’t count as taxable income.
What This Change to ICHRA Means for You
The shift from group health insurance to ICHRA means you have more control over your healthcare decisions. Instead of being locked into a group plan that was chosen for you, you get to shop for the plan that best suits your individual needs. This can mean more specialized coverage, a broader doctor network, or lower-cost options.
ICHRA: It’s Not Group Health Insurance, It’s Better
