How to choose the right individual health plans with your ICHRA funds

If you're among the 72% of private industry workers with medical benefits through your job, you're probably used to your employer offering a chance to sign up for group coverage. Customarily, employers offer a small number of plans and may cover part of the premiums. 

A growing number of employers are opting out of this traditional arrangement, though, and choosing an Individual Coverage Health Reimbursement Arrangement instead. ICHRA plans allow your employer to reimburse you for the cost of a qualifying healthcare plan you choose on the individual marketplace -- as well as to reimburse for other eligible medical expenses. 

If your organization is offering an ICHRA, the business is required to notify you of your eligibility to participate at least 90 days before the plan start date. You’ll have to choose an individual health plan when you get this notice. (https://www.healthcare.gov/job-based-help/ichra/)

This guide explains how to do that so you can find a good-fit coverage. To get the best coverage, follow these simple steps to buy health insurance as part of an ICHRA plan.

1. Understand your ICHRA benefits

Before purchasing health insurance on your own, you must understand your ICHRA benefits. 

ICHRA plans allow employers to provide tax-deductible reimbursements for health insurance premiums. You aren't taxed on the reimbursed funds. Your employer will specify how much the company pays based on your ICHRA class, such as full-time, part-time, seasonal, or temporary. You can use the money to cover health insurance premiums or other medical expenses such as doctor visits, over-the-counter medications, or prescription drugs.

If you choose a plan that costs more than your employer’s reimbursement, you must pay the difference out-of-pocket. If your plan costs less, you'll have money left over and you can be reimbursed for other eligible medical expenses. (CMS.gov)

Eligible plans when buying health insurance using ICHRA benefits

Employees can select a health insurance plan on their own and get employer subsidies under ICHRA as long as that plan meets certain requirements, including the following:

• It must be an individual health insurance policy. You cannot get reimbursed for group coverage from other sources, such as your spouse's group plan. Any individual coverage counts, including plans sold on or off the Healthcare.gov exchange, as well as Medicare Parts A, B, or C., and either you or your spouse can be the primary policyholder. 

• It must meet minimum essential coverage standards. This means it must meet the Affordable Care Act requirements, including offering coverage for preventative care.  Any plan sold on state or federal Healthcare marketplaces would qualify. 

• It must include 10 essential health benefits. The Affordable Care Act defined 10 essential benefits including ambulatory patient services, emergency services, hospital visits, maternity and newborn care, pediatric services, mental health and substance abuse care, prescriptions, rehabilitative services, lab services, and preventative care.

If plans aren't affordable with employer subsidies, you can opt to receive premium tax credits through the Affordable Care Act instead. 

If plans are affordable, though, you can't double-dip and get both employer reimbursement and ACA premium tax credits. You can’t opt out and choose the premium credits from the ACA if plans are affordable with reimbursement under ICHRA. 

2. Access your healthcare needs

When purchasing health insurance independently, it's important to match your plan to your specific healthcare needs.

If you use a lot of healthcare because you're sick often or have a chronic condition, you may want to pay more for a policy with a lower deductible and more comprehensive coverage. If you are relatively healthy and rarely see a doctor, you may prefer a plan with a higher deductible but lower premiums. 

To make sure you're buying insurance that's right for you, consider:

• How often do you visit a doctor?

• Are you on a lot of prescription medication?

• Do you want to be able to see specialists without referrals?

• Is it important to you to see a specific doctor?

• Can you afford to pay a large deductible?

• Do you prefer higher fixed costs but lower unpredictable care expenses?

You can decide what kind of plan makes sense by answering these questions. 

3. Compare plan options

The next step is to find a plan that is a good fit for your needs and affordable based on the reimbursement your employer offers. 

Added flexibility is one of the biggest benefits of ICHRA because you can find a plan that's right for you from a wide range of different options. For example, different kinds of health insurance plans you could buy include:

• Health Maintenance Organizations (HMOs): HMOs offer affordable care within a network of hospitals and care providers. Costs of care may be lower because the insurer contracts with these providers, but you can't usually see an out-of-network doctor. You'll typically also need a referral from a primary care doctor to see a specialist.

• Exclusive Provider Organizations (EPOs): Care is typically covered only if you see doctors, specialists, or providers in the plan's network, except in an emergency. However, you typically don't need referrals to see a specialist. 

• Preferred Provider Organization: PPOs offer more flexibility, including the ability to see out-of-network doctors and specialists without referrals. Your insurer will have a network of preferred providers; if you see doctors outside of it, care costs will be higher. 

• Point of Service:  POS plans allow you to pay less if you see healthcare providers in-network. You'll also need a referral to see a specialist. (Healthcare.gov)

You can choose to buy these types of plans on the Healthcare.gov marketplace or your state's marketplace. These marketplaces were created by the Affordable Care Act to offer a centralized database of health plans that meet minimum coverage standards. 

You can also buy individual plans not sold in the marketplace. However, you must ensure they meet the minimum essential coverage standards, or you won't be eligible for subsidies from your employer's ICHRA plan. 

How to compare plan options when buying insurance under ICHRA

Many tools can help you compare plans when purchasing health insurance on your own as part of your ICHRA plan. These include:

• ICHRA Platforms

• Brokers

• Health insurance marketplaces

Using these tools, you can compare features like:

• Premiums: What is the monthly premium for the policy? This is the set amount you pay each month for coverage. 

• Subsidy interaction: Do your ICHRA subsidies apply? Will they cover the premiums?

• Deductible: How much do you have to pay out of pocket before services are covered? There are usually separate deductibles for in-network vs. out-of-network care.

• Copay/coinsurance costs: What portion of the cost do you pay when you get covered services? For example, you may have a 20% copay or a $10 copay. 

• Out-of-pocket maximum: This is the maximum you'll pay for covered services each year. The maximum limit is usually different for in-network and out-of-network care.

You can also check to see if additional benefits are available, such as coverage for telehealth services, wellness care, or dental care. 

4. Enroll by the deadline

Finally, the last key step when buying health insurance under ICHRA is to understand the enrollment deadline. 

Under the Affordable Care Act, you are only allowed to enroll in a health plan during open enrollment, unless you qualify for a special enrollment period. When your employer offers you an ICHRA as an employee benefit, this creates a special enrollment period. 

If your employer offers an ICHRA for the first time or renews these benefits for a new plan year, you should get 90 days' notice before the new plan year starts. Your enrollment period will start 60 days before your new coverage will take effect.

If you become newly eligible for an existing ICHRA plan, your employer must provide you with notice no later than the time your eligibility starts. Typically, you'll have 60 days from when you became eligible for coverage to sign up. 

Your employer should tell you your enrollment deadline, so be sure to act to avoid missing the chance to get individual health insurance coverage with employer-subsidized premiums. 

Many employers use services like Thatch to help with administrative issues. Thatch can alert employees to plan eligibility and enrollment deadlines, helping to ensure they don't miss the opportunity to get covered. 

If you're an employer interested in offering ICHRA plans for your company, consider scheduling a demo with Thatch. Our team of experts can help you establish your plan and make it easy for employees to manage their benefits and get the care they need.