The rise of ICHRAs: Why some employers are turning to the individual market

Employers have been saying for years that they can’t absorb any more cost growth for health insurance; health plans feel like they’ve squeezed about as much juice as possible out of traditional cost mitigation levers. Both are looking for creative alternatives to curb rising health costs. Enter ICHRAs.

Usually, when we talk about the health insurance landscape, we focus on Medicare, Medicaid, or employer-sponsored insurance. But roughly 21 million people in the US are covered by individual marketplace plans, and in 2020, a new type of plan hit the individual market, moving health insurance from a “defined benefit” to a “defined contribution” in an effort to curb employer health costs.

In this episode, host Abby Burns invites Advisory Board health plan expert Morghen Philippi to shed light on what Individual Coverage Health Reimbursement Arrangements, or ICHRAs, actually are, how employers, plans, and providers are responding to their rise, and what leaders need to keep an eye on when it comes to these plans.

Note: This episode was recorded prior to the 2024 elections. Given the results, it is unlikely that the enhanced subsidies referenced in this episode will be renewed, which will affect the health of the individual marketplace. If enhanced subsidies expire at the end of 2025, you can expect it to have a direct impact on the individual market and on ICHRA viability, specifically. That said, because of the first Trump administration’s role in establishing the ICHRA model, the incoming administration may work to support ICHRA growth.

Links:

• Is the cost of employer-sponsored insurance at a tipping point?
• Market outlook for individual and small group health insurance
• Ep. 176: Test, fail, and test again: Morgan Health's approach to employer costs
• Enhanced subsidies propelled ACA marketplace enrollment. What’s next?

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A transcript of this episode as well as more information and resources can be found on www.advisory.com/RadioAdvisory.