For this episode of our GoodLife U video blog series with Dr. Mike Strouse, we are excited to share some unique concepts surrounding employee bifurcation, benefits, and what all is now possible within the new Individual Coverage Health Reimbursement Arrangement (or ICHRA) policies.
Let’s start with a quick overview about why this discussion is important. In principle, there are fundamentally two groups of employees: salaried folks (administrators, managers, clinicians, etc.) and the hourly, direct support workforce. As we’ve explored before, direct support professionals (DSPs) have different barriers and needs, which means they have different desires when it comes to benefits. However, because salaried administrators are the “stayers,” they are most often the ones making decisions about what benefits and plans are selected. In reality, if the benefits packages were being designed by the hourly employees (based on what works best for DSPs) the benefits would look pretty different from the packages currently on the table.
Thanks to some changes that came down the pike in the midst of the pandemic, employers can more easily treat employees the way they each want to be treated by bifurcating the workforce and offering benefits packages that suit each classification’s needs. This can get complicated, but bear with us as we dive into the benefits of exploring an ICHRA as a health-benefit for your DSPs.
What is an ICHRA and why is it good?
As its name implies, an ICHRA is a reimbursement plan. This is different from a traditional group plan where the provider pays for the “premium” which has been determined by the number of employees who opt in and what the medical claims history of your group looks like, among other things. With an ICHRA, an employer elects what amount it will reimburse for medical expenses, and the employee has the option to select this plan or go to the Federal Exchange.
An ICHRA is highly customizable and can be designed for your workforce in ways that make sense for each segment you want to carve out. Here are just some of the ICHRA Employee Classes:
- Part TIme
- Geographically-defined areas or remote employees
- And more (including any combination of 2 or more classes)!
Among its benefits, an ICHRA eliminates utilization risk, is extremely diverse in its design and application, and can include safe-harbor payments to satisfy rules for offering a complying health plan. Similarly, due to its flexibility, an ICHRA will also give you the option to deliver a non-complying health plan for your DSPs—believe it or not, this might be worth considering.
Wages versus benefits: it’s just math
In our industry, most agencies pay for a percentage of an individual’s health insurance plan and rarely do you see employers pay for family coverage (or even a percentage of family coverage). However, many of our DSP may actually qualify for family coverage with a subsidy on the federal health exchange. So when you provide a complying plan, you may actually be preventing that employee from accessing a subsidy or tax credit on the marketplace.
We’ve said before, “It’s just math.” There are only a fraction of the DSPs who opt-in to pay their portion and receive employer health benefits. An even smaller percentage opt into family coverage. In fact, if we enable DSPs to go to the exchange by offering a non-complying plan, they may be able to access more benefits than you, as the employer, can ever offer.
Complying or not, the ICHRA does enable DSPs to make a decision about what’s best for them and their families, while maximizing the resources that you have to offer.
ICHRA: a solution to your group-plan problems
In the wide world of health insurance, you’re likely aware that participation rates are really important. If your organization goes to the market with only 70% of your employees participating, it is highly likely that your premium rates will be high. For insurance companies, “risk” goes up when participation goes down. The lower your participation rate is, the higher your premium payments will be in your group plan. But, when you use an ICHRA and carve out your hourly workforce, for example, these individuals don’t get counted in your participation rate, and when you go to the market with 85% participation rate you get better group-plan premiums.
If you’ve got claims issues, participation problems, or see your costs going through the roof, please consider the ICHRA as a solution worthy of consideration. By utilizing an ICHRA, you’re taking the hourly workforce and giving them more money (which they can spend on benefits that suit their needs) instead of a bundle of benefits they can’t afford and historically won’t select. It really can help you do more for each of your employees with the limited resources you have available.
GoodLife U’s Benefits Workshop
We would love the opportunity to chat with you directly about HOW to use these techniques and approaches to improve your benefit offerings to your employees. We don’t necessarily believe an ICHRA is the right fit for all providers, but we are committed to helping you know what options and innovative solutions are available. Our GoodLife U team partners with our friends at Fisher Phillips and the Miller Group to offer a 2 hour Benefits Workshop to analyze and explore health insurance strategies for providers enrolled with GoodLife U. We love redefining what’s possible and would be happy to help you explore your options for treating your employees the way they want to be treated, even when they want different benefits.
If you’re interested in working with our specialized GoodLife U team to affordably and sustainably improve your workforce stability, please reach out to us to schedule your free Workforce 101 Workshop. We’d love to have you join our GoodLife U Class of 2022, but hurry! Enrollment is filling up fast.