Since January 2020, the Individual Coverage HRA has continued to gain traction among business owners looking for personalized, budget-friendly, and predictable benefits solutions. As an HRA administrator, Take Command has analyzed our current roster of clients using this reimbursement model. From this data, we've been able to draw insights and trends helpful for other business owners considering an HRA.
HRA signups at Take Command have more than doubled since our initial findings on ICHRA pioneers at the beginning of the year, and it’s certainly trending upward now with benefits season here. In fact, there are bold indicators pointing toward stabilizing individual markets (a critical factor in the success of ICHRA), like the MLRs (Medical Loss Ratios) of carriers in the individual market and the rebates being provided to policy holders.
We’ve seen consistent monthly signups with a notable exception. As expected, we saw a downturn of new ICHRA signups for the month of March. Instead of affecting March’s signup numbers, however, what that actually means is that because of the 90-day employee notice, our numbers fell for June as employers kept a watchful eye on market conditions. Numbers have picked back up swiftly.
→ Check out our post on ICHRA 2022 for the latest information!
→ Wondering which health insurance carriers are best suited for ICHRA? We've got a report for that.
ICHRA signups per month at Take Command
source: Take Command
Here are a few big takeaways from our ICHRA 2020 analysis.
The average reimbursement rate for 2020 ICHRAs are $749.93 for singles, $847.20 for couples, and $931.95 for families.
There were outliers that we excluded from the overall average that are worth pointing out as they demonstrate how customizable an ICHRA can be for each company and their budget. The minimum reimbursement was $40 a month and the maximum was $20,000 pepm.
The quick answer is yes! One of the major selling points of the individual coverage HRA is the ability to scale benefits across different types of employees, allocating specific amounts for different classes of employees, like part-time vs. full-time, or salary vs. hourly.
Out of our clients, the number of classes used ranges greatly. One employer designated 12 classes, representing the largest number of segmentation. Employers generally have between 1-5 classes. Average plan has two classes. 26% of classes include geographic areas, representing employees outside the geographic region of headquarters (i.e., remote workers.
States that have the most HRA enrollments so far are CA, FL, NY, PA, and TX, representing the states adopting this reimbursement style of insurance the fastest.
As more and more employers and their brokers hear about ICHRA, we expect to see ICHRA gain traction in areas with strong individual markets.
Here's a ranking of the top 20 states where ICHRA adoption is highest, based on client signups at Take Command.
While we have clients in almost every sector, certain types of industries and businesses are more likely to offer an ICHRA to their employees. Here's how the list breaks down.
source: Take Command
Our findings conclude that employees are signing up to participate in their employers' HRAs.
Overall, 58% of eligible employees participated in their ICHRA benefit. This is in line with the national average of employees (61% in 2019) that take up coverage from their employer’s group benefit according to a study by Kaiser Family Foundation.
It's important to note the participation requirements for ICHRA. Eligible employees must secure individual insurance coverage (either on/off exchange or Medicare) to participate. Employees that have insurance secured through a spouse’s employer cannot participate in ICHRA. In this way, the ICHRA plan most closely resembles a typical employer sponsored group plan.
While the Qualified Small Employer HRA is a great option for many, some companies felt limited by the QSEHRA reimbursement limit that's placed on it. With that in mind, we weren't surprised to see a portion of our existing clients move over from offering Qualified Small Employer HRAs to offering the limit-less Individual Coverage HRA.
The QSEHRA limits for 2020 were $437.50 for single employees and $883.33 for employees with dependents. From our clients that converted to ICHRA, we saw the average monthly allowance overall rise to $1,860 a month with most employers choosing not to vary rates by age and stick to the contribution model of QSEHRA of varying rates by family status. The average allowance for single employees increased to $761.46/ month and $929.99/ month for employees with dependents. The average company size in this category had 4 employees with 2 participating in ICHRA.
On a highly relevant note, watching the flexibility inherent in HRAs play out in real life during the pandemic has been interesting. Many of our clients were able to maintain benefits because they could make adjustments on the HRA front.
A few notable examples:
See our blog post about this here.
While there are changes we hope to see from a regulatory rule perspective, we believe the bipartisan nature of HRAs will serve them well in the coming months and years.
Here are a few regulatory actions we hope to see:
To see our letter, with the support of several benefits industry leaders, sent to Commission Rettig and Secretary Mnuchin on this matter, click here.
Much of our time and investment has been building products and teams to support the increase demand for ICHRA and to engage and educate brokers. In anticipation of a major uptick in HRA signups, we’ve redone our website from an experience standpoint, have hired a dedicated enrollment team to help employees find HRA-compliant plans, and have launched a broker partner program to help educate and empower the front line.