Providing health insurance for your employees is one of the most important aspects of running a small business, but it can also be one of the most challenging. Small business owners often find themselves overwhelmed by the options, costs, and paperwork involved. However, there’s a newer, simpler solution: ICHRA (Individual Coverage Health Reimbursement Arrangement). This pre-tax fixed health benefit allows employers to give their employees pre-tax money to buy health insurance on the marketplace.
If you’re curious about whether employees can find a suitable plan on the marketplace, the answer is yes. Let’s dive into three key insights about the health insurance marketplace that could help small businesses save money and provide better coverage for their employees.
Secret #1: Marketplace Plans Are Often Cheaper Than Group Plans
A common misconception is that small businesses benefit from “discounted” group health insurance plans. Historically, it was true that group plans were cheaper than individual plans. However, times have changed. Today, in over 20 major cities across the U.S., small group health plans are more expensive than comparable plans available on the individual marketplace.
This means small businesses that continue to offer group plans might end up paying more, and in some cases, significantly more. The good news is that by using ICHRA, employers can help employees purchase individual plans that fit their needs at a lower cost. Plus, employers have more control over their budget, as they can set a fixed amount for employee contributions, unlike group plans that require a minimum premium payment.
Secret #2: The Marketplace Offers More Diverse Plan Options
When the Affordable Care Act (ACA) was passed, the goal was to expand access to affordable health coverage. However, one of the key criticisms was the limited selection of plans. That’s no longer the case. Today, the health plans available on the marketplace offer a much wider range of options compared to the shrinking small group insurance market. Even large insurers like Humana have left the small group market entirely, making marketplace plans a more attractive choice.
The marketplace now provides a diverse selection of plans, ensuring that employees have access to coverage that suits their personal needs. This variety is a major advantage over the more limited offerings in the small group insurance space.
Secret #3: The Marketplace Has Price Safeguards in Place
One of the most frustrating aspects of offering employee health insurance is the unpredictability of price increases. While the individual marketplace did experience some price hikes after the ACA’s implementation, regulators have since put effective rate reviews in place to ensure that significant premium increases are scrutinized. This has led to more moderate price hikes in recent years.
In contrast, small group insurance plans often see unpredictable premium increases due to factors like high claims from one employee’s health issues. This lack of price transparency can make budgeting for small businesses more difficult. The marketplace, however, offers more stability and protection against these unpredictable increases.
How ICHRA Can Help Small Businesses Save on Health Insurance
The marketplace has evolved, offering better coverage, lower costs, and increased transparency. That’s why many small businesses are turning to ICHRA to provide health benefits to their employees. With ICHRA, business owners can control costs while still offering competitive benefits, and employees get the flexibility to choose plans that meet their individual needs.
By offering a pre-tax fixed health benefit like ICHRA, small businesses can save on administrative costs, provide valuable health benefits to their team, and offer employees more control over their healthcare. This solution simplifies the process for both employers and employees, making it easier to navigate the complexities of health insurance while still getting excellent coverage.
