Individual coverage health reimbursement arrangement, or ICHRA, is an alternative to group health plans for small businesses. This arrangement allocates $100 a month per employee that companies put toward individual coverage on the open insurance market. They can either be used to pay insurance premiums or cost-sharing to get the overall price of the policy down.
This could be a good option for small businesses who feel the price of a group insurance plan is too steep for them at this time but still want to offer health assistance. The $100 a month reimbursement does not count as taxable income, so the person receiving the payment is able to use it in full. An ICHRA is a sort of middle ground between ACA and group plans. For people who earn income that is higher than ACA qualification, this would be a viable option if they are working at a smaller company that elects not to offer said group plan.
However, it could leave employees with a more difficult enrollment process and coverage that isn’t as good as it would be under a group plan.
“This is a way to offer a lower premium option to some employers, but with the consequence of increasing premiums in the individual market and costs for the federal government via higher premium tax credits,” Matthew Fiedler, economic studies at USC-Brookings said.
Larger employees are not too keen on the new rules at the moment, as it would be more cost-effective for them to still roll with the group plan rates.
All in all, this rule put into effect by the Trump administration could benefit small businesses who do not have health plans for their employees, but would like to assist in them getting it. While it could complicate things such as the enrollment and reimbursement process, at the end of the day it could end up saving people thousands of dollars if they use the plans in the right way. While different from ACA, it still offers individual plans to choose from allowing the consumer to pick the one that is best for them at that given time.
We hope this information on An alternative to group health plans for small businesses is helpful.
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