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Health insurers with big exchange marketplace operations such as Centene and Oscar Health are partnering with newly formed companies to take a bite out of the lucrative employer health benefits market through a relatively new form of coverage.
These exchange carriers are betting big premium increases will push more employers to adopt individual coverage health reimbursement arrangements, or ICHRAs, as an alternative to group coverage.
Through ICHRAs, companies can offer workers tax-exempt subsidies for exchange policies instead of providing insurance themselves. These arrangements save employers money by effectively capping health spending and free them from the administrative burden of managing benefit programs.
ICHRAs direct workers toward coverage that is less comprehensive than typical job-based plans. But structured correctly, they could provide a pathway for small and newly formed businesses to offer employees health insurance, some for the first time, said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation.
In the three years since President Donald Trump's administration ushered in ICHRAs, employer uptake has been slow. But vendors, insurers and brokers contend this year represents a tipping point as small-business health insurance premiums soar and the exchanges grow more competitive.
"There is a little bit of a second wave of enthusiasm about it, where there's a lot of new ICHRA companies that have formed lately," Hempstead said. "For plans that don't have a good group business, it's all good. If they get more members out of the group market, that's terrific. And the more people that are in the individual market, the harder it becomes to take things away from it, or weaken it."
Individual versus small group
Advocates of ICHRAs contend they have the potential to revolutionize health...