Healthcare insurance seems to get more expensive every year. It’s not just individuals who have to shoulder a more significant financial burden but employers who offer sponsored healthcare plans.

Those companies that aren’t required to offer health insurance may find that not doing so puts them at a major disadvantage to competitors when it comes to attracting and retaining employees.

Luckily, there’s an another option called Individual Coverage Health Reimbursement Arrangements, or ICHRA plans, that can provide employees with money to pay for medical expenses while reducing the costs for employers.

Here are some of the major benefits of these ICHRA plans.

Flexibility

Unlike traditional employer-sponsored health plans, ICHRAs provide companies with a lot of flexibility. The employer can choose how much in reimbursements they want to offer to their employees, with no maximum allowances.

In addition, employers can offer these plans to different sets of employee classes, such as just part-time workers who might not qualify for the company’s full medical benefits. In this way, a company could seek to attract more non-full-time workers by still offering some form of benefits.

Recruiting

Attracting and retaining top talent is a key determinant of success for all businesses. A salary alone isn’t enough to do that nowadays, as employees are expecting more extensive benefits packages.

Companies are often vying for the same pool of employees — whether it be for full-time, part-time or seasonal work. By utilizing ICHRA plans, companies can offer health benefits to all of them.

As mentioned before, the business can offer full-time workers a traditional health insurance plan, and then offer part-time and seasonal workers an ICHRA plan. This keeps every employee happy, no matter what their work schedule.

Tax Benefits

The amounts that employers contribute to ICHRA plans aren’t considered wages. This has a number of benefits, from both the employee and employer side.

For employees, this means that it’s a benefit that’s completely tax free to them. The contributions they receive from their employer don’t add to a worker’s gross income, which means they can take advantage of the money and still remain in a lower tax bracket.

From the employers’ standpoint, since the reimbursements aren’t considered wages, they aren’t subject to employer taxes. This can be a significant amount of savings right off the bat.

In addition, amounts that are contributed to an ICHRA plan are actually considered contributions to a welfare and health plan, which make them qualifying business expenses.

In other words, it’s not just money that a business will save, but money that they can write off to reduce their tax burden even further.

Budgeting

From a budgeting perspective, ICHRA plans provide a way that businesses can control costs. Since employers determine how much they contribute to these plans, they are able to have a set and consistent expense on their budget every month.

Traditional employer-sponsored health plans may come with significant increases from one year to the next — for both employers and employees. This can happen if a particular year results in a large number of medical claims, or if employee participation in the program is low.

Being able to plan for controlled costs is something that makes every accountant smile. ICHRA plans provide that cost certainty to employers.

Simplicity

Health insurance can be so complicated. Whether a business offers the insurance directly on its own or with the help of a benefits broker, there are myriad things that have to be considered.

In addition to trying to find the most cost-effective option available, companies must balance their employee demographics from a health perspective as well as figuring out which specific benefits their employees — and potential future employees — would desire most.

This takes a lot of time and effort to do right, and it can cause a lot of frustration within the business. Not only that, but it takes away from the core competencies of the business and can act as a distraction.

That’s not the case with ICHRA plans. Since they just offer a fixed reimbursement amount every month — which, again, is determined by the employer — it’s as simple as you can get from a benefits standpoint.

Employees simply use the benefit for what they need, and there’s nothing else to worry about.

Figure Out if ICHRA Plans are Right for You with Beckham Ellis Insurance Group

There’s a lot to like about ICHRA plans, though they’re not for every business. Whether this would make sense to your company or not depends on a lot of different factors.

At Beckham Ellis Insurance Group, we help all of our clients figure out the complicated web of employee benefits programs. Our team of experts can help you navigate the muddy waters, and discover whether an ICHRA plan would be right for you, or whether you might be better served with a traditional health insurance plan.

If you’re in the South Carolina or Georgia area, contact us today to find out more.