Employee benefits have undergone significant changes over the last 25 years. As health-care costs have risen and work itself has changed, new plans have been created to give employers more options when it comes to offering employee benefits.

Company-sponsored group plans have traditionally dominated the employee benefits landscape, but newer offerings such as the Individual Coverage Health Reimbursement Arrangement (ICHRA) could be viable options for some companies.

Below, we’ll discuss when it might make sense for your company to transition from a group plan to an ICHRA.

You Want or Need More Flexibility

Group plans are great for providing simple employee benefits solutions. They’re a one-size-fits-all approach to benefits, giving employees a few choices of health insurance plans to choose from.

If your company wants or needs more flexibility, though, then you might want to consider an ICHRA.

These plans are especially attractive for companies that operate in multiple states or have a large percentage of employees who work remotely and possibly from multiple states. They’re also great for companies that have a large mix of full-time, part-time and even seasonal workers.

One of the biggest advantages of ICHRAs is the ability to create separate employee classes and assign a company contribution based on each class.

For example, you can create different classes for full-time workers and part-time/seasonal workers, giving different levels of contribution for each. You can do the same location so you can adjust contribution levels based on that area’s cost-of-living.

You Want More Cost Control

Traditional group plans provide you with cost certainty for only a one-year period. Your costs, and employee premiums, are set once a year.

However, due to a variety of factors, your benefits costs can rise significantly from one year to the next. This could include a high number of claims or a spike in the total amount of claims, a change in your workforce, or other outside factors that are not in your control.

This makes planning from a financial perspective difficult beyond just one year.

By transitioning to an ICHRA, you can gain back cost control. Even if you decide to increase your contribution levels from one year to the next, you will be in control of how much that is.

Companies can gain a lot of financial structure and predictability with an ICHRA, as they are no longer susceptible to major spikes in group plan hikes.

You Want to Reduce Your Administrative Burden

Another potential advantage of IRCHAs is they often come with a smaller administrative burden compared to traditional group plans. While there are still reporting requirements and compliance, these are usually not as stringent as group health plans.

Not only that, but your company won’t be the one processing enrollments and claims, since employees will be obtaining health insurance coverage on their own from outside sources such as the health insurance marketplace exchange.

One thing to note is that ICHRAs don’t always provide a significant reduction in the administrative burden on companies. A lot of that depends on your company’s specific situation.

Your Employees Want More Choice

A downfall of group plans is that employees typically only have a few choices in health insurance plans for each open enrollment period. They are more off-the-shelf plans, too, and don’t often come with options to add or remove services based on an individual’s needs.

ICHRAs give employees a lot of choice when it comes to their health insurance. Employees obtain insurance on their own, and have the freedom to select plans that cater to them specifically.

They can look at health marketplaces or other avenues to personalize their coverage based on their age, health needs and wants, size of their family, budget and more. All of this empowers employees to create a health insurance plan that serves them well.

Then, they can use the employer contribution to lower the costs of their health insurance coverage and certain out-of-pocket expenses so they can gain more control of their personal budget.

Decide if an ICHRA is Right for You with Beckham Ellis Insurance Group

Traditional group plans aren’t the only option for companies to offer employee benefits. ICHRAs have become increasingly popular in recent years, thanks to the flexibility, cost control, tax advantages and employee choice they provide.

If you’re unsure whether it would make sense for your company to transition from a group plan to an ICHRA, contact Beckham Ellis Insurance Group today. Our experienced professionals can break down every aspect of the plans for you, making it easier to understand which would be right for you and your employees.

Reach out today to learn more about how we can help you.