The healthcare industry has taken a hit since COVID-19 caused a tidal wave of layoffs, resulting in the loss of health insurance for employees across the country.
To make ends meet, plenty of those workers took on gig work, which can provide a paycheck but rarely comes with employer-sponsored benefits. But employers can still support these limited-time employees through an individual coverage health reimbursement arrangement (ICHRA). ICHRAs allow employers to give tax-free reimbursements for insurance premiums and other medical expenses to employees that enroll in a health plan through the individual marketplace.
It sounds like a simple solution, but ICHRAs come with administrative burdens that often deter employers from offering them, and keep employees from utilizing them. Echo Health, an electronic healthcare payment solutions provider, launched a new premium payment manager tool in September, hoping to relieve some of the headaches that can come with offering an ICHRA.
“We take care of the administrative hassle of paying the premiums so that employers and employees can enjoy the benefits of ICHRA,” says Tom Dean, president of Echo. “We simplify the process so that we can easily work with any benefits administrator that is helping employees enroll for ICHRA plans.”
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In a recent interview with Employee Benefit News, Dean shared his thoughts on the value of ICHRAs, the challenges employers can face when implementing them, and how their solution is designed to help.
How can an ICHRA benefit help gig workers?
ICHRA is something the government instituted to allow employers to offer all or some of their employees healthcare benefits. But it is done in terms of a defined contribution, meaning that they allow the employee to go out onto the Affordable Care Act exchange and pick the health plan that works best for them, and then the employer says they will pay up to X-dollars per month of the premium associated with that plan.
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Something like this might fit a segment of your employees, even if you're a large company. For companies like Uber or Lyft, they might say that for a number of their drivers, it is their full time job, but the company has an arm’s length relationship with them. But through ICHRA, the business can now make a contribution towards their employees’ monthly premiums, rather than say, ‘no, you figure that out on your own.’
What administrative challenges come with adopting an ICHRA solution?
The way ICHRA is designed is, this is an individual getting individual coverage, but as an employer you’d like to make sure that you’re making a contribution in an effective way.
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We’ve all lived the experience of turning in expenses and then getting reimbursed, and that’s what happens with ICHRA. There are several problems associated with this. First, these employees don't make that much money, so they can’t afford to pay and then wait to get paid back. A lot of that deters people from taking advantage of the benefit.
Second, there’s a lot of administrative hassle. To solve that problem one might ask, why don't you just front the employee the money? These folks are living paycheck to paycheck. If you front somebody the money and then they use it for some other purpose, they still might not buy the insurance or they might not pay the premium for this month. Now you've got another challenge, because how do you get that money back as the employer?
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Third, in most areas of the country, there are several different carriers and plans to choose from when you go to the exchange. So now as an employer, if I'm just administering this myself, I have to pay one health plan X amount of money for these three employees, this other health plan X amount of money for these other three employees, and so on.
How does Echo’s PPM help simplify the ICHRA process?
We help health plans pay healthcare providers, hospitals, doctors, dentists, etc. What we say to the employer is that we will reconcile all of the amounts that are owed, we will pay the individual payments for each one of your individual employees, and we’ll validate that they're eligible.
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We take the money from the employer and then we look back at what kind of coverage an individual employee had, tell the employer exactly how much they’re supposed to deduct from their payroll and organize all of the payments we’ve made for the individual employees. We are offering a way to remove administrative headaches to help manage the one thing that probably would deter people from taking advantage of what otherwise is a pretty good idea.
