By Ray Seaver
zizzl | CEO
In June of 2019, President Trump signed into existence the Individual Coverage Health Reimbursement Arrangement (ICHRA). They became available for employers to use in January of 2020. Like many business owners, I find the annual health insurance renewal process increasingly frustrating. It gets harder and harder every year to find an insurance company with affordable plans that work for everyone let alone the company’s budget. With an ICHRA plan in place, employers don’t pick the insurance company or plans to offer. Employees buy their own individual health insurance plan with pre-tax money.
The Dream of Budget Friendly, Hassle-free Health Insurance
Many employers, including this one, have dreamed about making health insurance easier to budget and provide by giving employees money to go out and buy their own individual health insurance plan. But two things have kept us from doing it. Prior to ICHRA’s, money given to employees to buy their own individual health insurance plan would be treated as taxable income. Second, a perception exists that group health Insurance plans are better and less expensive than individual health insurance plans.
Contributions in an ICHRA Plan Are “Pre-Tax”
When structured and communicated properly, employer and employee contributions in an ICHRA plan are “pre-tax”, just like contributions in a traditional group plan. Employers must have a section 125 plan document in place that contains a “pre-tax” premium provision and employees must purchase a qualified individual health insurance plan.
Individual Health Insurance Plans Are Comparable to Group Health Insurance Plans
While this is not the case in every state, many states have several health insurance companies offering a wide variety of qualified individual health insurance plans. Wisconsin, for example, has 21 insurance companies offering approximately 230 plans across the state. Plan types vary from HMO and EPO style plans to broader network Point-of-Service and PPO style plans. Although it varies from county to county, community rated groups plans in Wisconsin are slightly more competitive than community rated individual health plans for similar plan designs. However, in an ICHRA plan, employees have the freedom to choose from a wider variety of insurance companies and plans that fit their unique budget and provider preferences. In balance, plan design, provider, and rate differences between individual and group plans in Wisconsin are getting more and more difficult to distinguish. That trend is expected to continue into 2021.
Making the Dream a Reality
We believe that ICHRA plans are a viable strategy for employers to explore in states that have a competitive individual health insurance market like Wisconsin.
Today, we launched zizzl Health for Wisconsin based employers. With zizzl Health, employers don’t pick the insurance company or plan for their employees. They simply decide what they want to contribute and zizzl helps their employees find their own individual health insurance plan. We do that with a tailored list of carefully selected plans from a variety of insurance companies, personalized assistance, and easy to use recommendation tools.
zizzl Health gives employers permanent control over their health insurance budget. No matter what an employer decides to contribute each year, employees will find options that work for them. It’s a budget friendly, hassle-free way to provide health insurance.
To learn more, visit zizzlHealth.com or call 414-800-2018.