As health insurance costs continue to rise, employers and employees alike are looking to save as much money as they can while still providing, and receiving, reasonable health-care benefits.

In the last few years, the popularity of Individual Coverage Health Reimbursement Arrangement (ICHRA) plans has grown in large part due to this focus on saving money. Of course, there are many other benefits of ICHRAs — from tax benefits, to flexibility, to cost certainty.

To maximize savings with ICHRA plans, though, you must know how they work and ways in which you can take advantage of them. In this article, we’ll provide tips for employers and employees on how to do so.

ICHRA Tips for Employers

Employers should weigh many different factors when considering how they can maximize savings with ICHRA plans. Here are some of the most important aspects from an employers’ perspective

Set Worker Tiers

A big advantage of ICHRA plans is that employers can offer different reimbursement levels to different sets of employees. In essence, you can create buckets of employees based on certain things, such as whether they are full-time or part-time workers, and then set reimbursement limits for each specific bucket.

This is a great way for employers to not only increase recruitment efforts by offering benefits to part-time or seasonal workers, but it also allows them to save money by adjusting the contribution amount for each bucket.

Research Comparables

When deciding how much you should contribute to the ICHRA plan, do your research into what others are doing. A good place to start is to figure out what other companies in your industry are offering their employees when it comes to ICHRA reimbursements.

It’s also a good idea to research the average cost of health insurance premiums in our state, and to consider where your employees are located. If you have a lot of remote workers who live in various states, for example, that’s something to take into consideration.

This research will give you a baseline for what you should set your ICHRA reimbursement levels at to save money while still remaining attractive for current and prospective employees.

Keep in mind you also must offer a contribution that’s termed “affordable” for your employees, which is something you need to check with an experienced health insurance broker or provider.

Pair Benefits with HSAs

Health Savings Accounts (HSAs) became very popular when high-deductible health insurance plans became more prominent. They are a great investment vehicle for employees to save money for qualified medical expenses, as not only are the funds contributed tax-free, but so are the growth of the money and all withdrawals.

From an employers’ perspective, you can consider pairing your ICHRA with an HSA to maximize savings. Of course, you need to make sure that your ICHRA plan doesn’t work against the HSA, in terms of compliance.

Decide What Type of Reimbursements to Make

ICHRAs are very flexible, and that goes for how employers decide to make contributions for reimbursements. One popular trend in recent years is employers creating one bucket of reimbursements for health insurance premiums and another for other out-of-pocket medical costs.

Doing so gives employees a lot of additional flexibility, keeping their expenses down and making companies more attractive to employees. Other options include Premium Only Plans (POPs) and adding more choices through Cafeteria Plans.

ICHRA Tips for Employees

Employees also can maximize savings with ICHRA plans by being smart about their choices. Here are some ways they can do so.

Shop Around

ICHRA plans put the power of choice in the employees’ hands. They have the ability to find their own health insurance coverage, and then use the reimbursement money from their employer to pay them back.

To maximize savings with ICHRA plans, employees need to do a lot of research to find the best health insurance plan that would fit their needs and their family’s needs. This includes their overall budget and the level of care they need.

Employees can do this research on the ACA marketplace, hire a broker or find private insurers.

Ensure the Plan is Eligible

ICHRA’s provide plenty of tax and other cost-saving benefits for employees, but only if they choose a plan that’s determined to meet what’s known as the MEC, or Minimum Essential Coverage.

This research is the job of the employee, as they get the freedom to select the health insurance plan they want. If the ICHRA plan is deemed affordable, then you might not qualify for a Premium Tax Credit on top of the employer reimbursement.

However, if the plan is not affordable according to the IRS, then you could qualify for that credit.

Partner with Beckham Ellis Insurance Group

ICHRA plans are becoming increasingly popular among both employers and employees, and for good reason. Employers who are considering offering them to employees just need to make sure that they’re fully compliant with all federal and local regulations.

That can be rather complicated at times, which is why it’s best to partner with Beckham Ellis Insurance Group. Our experts can help you design an ICHRA that will save you and your employees money, while also increasing your attractiveness to current and future employees.

If your business is in the South Carolina or Georgia region, please contact us today.