More employers are choosing a new way to help workers get health insurance. Instead of offering a traditional group plan, these companies give employees money to buy their own coverage. This method is called Individual Coverage Health Reimbursement Arrangements, or ICHRAs.
With ICHRAs, employers provide a set amount of money to workers. Then, employees pick the health insurance plan that fits their needs best. This gives workers more freedom to choose their coverage but also puts the responsibility on them to shop for insurance.
Advocates say ICHRAs help small businesses that cannot afford to offer full insurance plans. It also helps employers control their costs by giving a fixed amount of money instead of paying for a group plan that might become expensive.
Normally, companies offer one or two insurance options and pay most of the premium. But with ICHRAs, workers can choose from many plans in the individual market. Some plans even focus on specific health needs, like diabetes care.
One benefit is that workers can keep their insurance if they leave their job, although they may have to pay the full cost themselves. This can make switching jobs easier without losing coverage.
However, there are downsides. Individual plans often have smaller networks of doctors, which can make it hard for people who see many specialists. Also, shopping for insurance can be confusing, so employers usually provide help through brokers or online tools.
The number of people using ICHRAs is growing quickly. About 450,000 people were offered coverage through these plans this year, a 50% increase from last year. Still, this is a small part of the overall employer health coverage market, which covers about 154 million people.
Experts expect more companies to adopt ICHRAs as health care costs rise. Some tax incentives may also encourage this trend. But people who get government help to pay for insurance may not be able to use ICHRAs.
Overall, ICHRAs give workers more choice but also more responsibility in managing their health insurance.
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