ICHRA is changing the face of employer-sponsored health benefits

by Ray Seaver | CEO | zizzl llc

When most business leaders are introduced to the concept of ICHRA, a relatively new model of employer-sponsored health benefits that provides long term budget control and the potential of significant savings over traditional group benefits, their first reaction is somewhere along the lines of “seems too good to be true.”

That was the sentiment expressed by Jon Gaines, VP of Finance at WWBIC, a statewide economic development corporation based in Milwaukee. The organization had been enrolled in a group health plan nearly since its inception but began weighing new options during the December 2020 renewal period to combat surging annual premiums — which were in excess of 35 percent. WWBIC couldn’t keep shouldering the financial burden with high cost-sharing. “We’re a small business growing fast, with limited employees,” explained Gaines. “A big part of it was really the dollars involved — the [cost] was just getting to be very prohibitive in regard to us being able to support a health plan at WWBIC.”

When they turned to zizzl to find a health benefits solution, WWBIC leaders were surprised to learn about ICHRA, a new option for employer-financed health coverage. “I kept thinking ‘How come we haven’t heard of this?” said Patti Lohmann, who heads up HR for the company. “The cost savings was a huge, huge positive but it also gave our staff a lot of options. Our employees were pleasantly surprised when they saw that they may not have to pay anything toward this benefit.”

ICHRA, an acronym for Individual Coverage Health Reimbursement Arrangement, allows employers to reimburse premiums for individual market coverage selected by employees, tax-free. It enables businesses to set the controls on their budget, and empowers employees to select their own healthcare coverage, rather than having their employer choose a group plan on their behalf or fall under blanket insurance. More than 74 percent of firms offering health insurance only provide employees with one type of health plan, according to the HRA Council. For WWBIC, part of ICHRA’s appeal rested in giving employees choice, but with a reimbursement process that was as easy to navigate as a group plan.

“The biggest thing was we could provide more and better options,” Gaines said. “That sigh of relief from our team and not, ‘Oh gosh, here’s another increase, a cost-share we have to do.’ We actually brought the cost down for our employees. For WWBIC, too. It’s been a complete shift to where we actually have savings … and can use those dollars to put them to use in other areas of our business.”

Since ICHRA was first enacted by the federal government in 2019 to help reverse the decline in the percentage of employers at smaller companies offering health insurance, the benefits model has largely flown under the radar. But the voluntary option is quickly catching on for its breadth of quality coverage and cost-savings.

At Milwaukee Cylinder, signing on to an ICHRA through zizzl meant the manufacturer could “get out of the benefits” business and put the reins back into the hands of their employees — with the guidance of their zizzl broker team. Earlier this year, the company’s VP of Finance, Justin Dahm, was staring down renewal costs from “big plans that were out of this world.” When he learned about ICHRA from zizzl, he was surprised by the number of quality plans available from major health insurers under the program and how much support would be provided to employees throughout the transition, many of whom were brand new to learning about and selecting their own health coverage.

“We didn’t really have the knowledge or ability to give all of our employees the information they needed to select the right plans,” said Dahm. “There was a lot of hand holding on our end, too. zizzl really walked us through it and put it all in layman’s terms for those of us who didn’t know the benefits side.” Dahm added employees also benefited by zizzl’s on-site presentations about ICHRA during the enrollment period, the broker’s online health plans assessment to help employees narrow their coverage options, and concierge service to help them select the right plan.

When it was all said and done, the company and its employees were thrilled with the results of an ICHRA benefits plan.

“We did some business analysis and it was just the right route for us to take,” Dahm explained. “We looked at different insurance plan options that were out there. Ultimately, we were looking for a better solution. ICHRA had great options for Wisconsin-based employees. We decided to jump in.”

At zizzl Health, we help companies explore their options for high-quality, hassle-free health insurance. If you’re interested in how an ICHRA can work for your business, click here to contact zizzl Health for a free ICHRA Cost and Savings Analysis.

Learn the Advantages of Individual Coverage HRA’s

by Ray Seaver | CEO | zizzl llc

As companies re-shift their focus from survival to growth following the pandemic, many employers are placing renewed emphasis on employee health and wellbeing — and rethinking their health benefits packages in the process.

When you’re a business owner, offering employer-provided health coverage is a great way to attract and retain top talent, and improve job satisfaction in the workplace. But over the years, rising healthcare costs have become a source of significant stress for employers and employees, alike.

Since 2010, average family premiums have increased more than 55 percent. In the past five years alone, the Kaiser Family Foundation found that annual family premiums for employer-sponsored health insurance rose 22 percent to an average of $21,342 in 2020, with employers contributing more than two-thirds toward the cost of coverage.

The surge of healthcare costs has forced many companies to reduce benefits and increase employee costs, or worse, opt out of offering health benefits altogether. Each year, we hear from customers who are frustrated by the annual health insurance renewal process and unexpected increases. Whether it’s finding an insurance company that provides affordable group health plans that work for everyone or finding a plan that fits within the company’s budget, the complexity of selecting coverage that satisfies both parties presents a constant challenge.

More than 80 percent of employers that provide coverage only offer one type of health plan to their employees, leaving many workers and their families behind, according to the Employee Benefits Security Administration.

When it comes to growing your business, investing in employee health and wellbeing should be a top priority. A healthy workforce positively impacts work productivity and performance, boosting the company’s bottom line. So, it’s surprising that many employers are still unaware of an ICHRA, which is a simpler way to create quality healthcare benefits for employees and provides employers with complete control over their health insurance budgets.

A New Health Benefits Model

ICHRA, an acronym for “Individual Coverage Health Reimbursement Agreement,” is a new kind of Health Reimbursement Arrangement (HRA). In 2019, the federal government created this new type of HRA which allowed employers to reimburse employees a fixed amount of money each month for health insurance premium and healthcare related out-of-pocket expenses if they used at least some of the money to purchase a qualified health insurance plan.

Today, through an ICHRA, employers can take advantage of this alternative option of providing quality health insurance benefits to employees with the same tax benefits of a traditional group plan. An ICHRA removes the hassles of employers selecting an insurance company or plan and allows employees to choose an insurance company and plan that fits their individual needs, household budget, and lifestyle.

Because employees are free to choose their own insurance company and plan, employers aren’t stuck between reducing benefits or increasing employee costs to keep budgets in line.

It’s also one of the reasons why an ICHRA is a great option for smaller companies, especially if they haven’t offered health insurance before. For larger employers subject to the Affordable Care Act, ICHRA’s keep them in compliance and out of the “penalty box.”

Since an ICHRA first became available to employers in January 2020, there has been a prevailing misperception that these individual health premiums are higher than group premiums. That simply isn’t the case. By providing employees with a greater range of options and allowing more people to shop for health plans in the individual marketplace, health insurance companies are more likely to innovate products and price them competitively. In Milwaukee County alone, there are at least 60 different health plans from five well-known insurance providers from which to choose.

According to the U.S. Treasury Department, more than 800,000 employers are expected to offer an ICHRA to cover more than 11 million employees and their families in the next five years, including by expanding health access to nearly one million workers who were previously uninsured.

Navigating the complex health benefits landscape can be challenging for any size businesses. With an ICHRA, businesses can remove the costs and burden of selecting a single health plan for their workforce and provide employees with a choice they can afford, allowing employers to focus on customers and building their business.

Individual Coverage HRA’s: A Health Insurance Dream Come True?

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.

Compliance Keeping You Awake: ACA, ICHRA, EBHRA

By: Rob Goll
zizzl | VP Business Development

Companies are challenged by staying up to date with compliance issues because of new and constantly changing legislation. The challenges with the ACA, new ICHRA, new EBHRA and much more are a time-consuming burden.

The ACA alone is extremely complex and often changing. ACA penalties for businesses are very real. According to the Congressional Budget Office, the IRS could collect more than $200 billion from applicable large employers (ALEs) over the next ten years. Recently the House Ways & Means Committee approved The Employer Relief Act. This bill would retroactively wave the employer mandate from 2015 through 2018. How do you stay up to date?

Now introduce the new HRA options. The U.S. departments of Health and Human Services, Labor and the Treasury introduced the Excepted Benefit HRA (EBHRA) and the Individual Coverage HRA (ICHRA). The one getting a great deal of attention is the ICHRA. The issued final rule allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement (HRA). FAQs on the new rule. These changes are being studied by attorneys, accountants, and brokerage firms to understand all the implications.

Companies must stay compliant with these constant changes. Working with a benefits consulting firm that integrates benefits technology with your HRIS and payroll solutions will help keep you compliant and get your leadership team back to the campfire.

PEO It’s Time To “Go”: When leaving a PEO

By: Rob Goll
zizzl | VP Business Development

The top reasons we hear from companies leaving a PEO are cost, culture, health plan and carrier flexibility. Any of these reasons and others have employers leaving PEO’s as their companies grow. It is clearly a commitment to the future. The struggle is when it is time to “Go” what is the next step?
The following are five major areas of consideration:

Federal Tax Withholdings: Check if your PEO is registered with the IRS as a Certified PEO (CPEO). This would prevent FICA and FUTA wage bases from restarting if a business leaves sometime after the first of the year.
State Tax Withholdings: Rules vary by state and you must know if you need to reinstate your state unemployment tax (SUTA) account. There are states that record a company’s claims history when with a PEO. Other states may require you to restart your tax rate or even go back to the base rate until you build a claims history.
FSA: An FSA is owned by the employer. Therefore, when the PEO is the employer/co-employer and the agreement is discontinued employees may not be able to secure the FSA funds. There are PEOs that will not process claims after the agreement is concluded. This can be true even if the claim was filed before the date that the agreement was discontinued. Contact your PEO to understand all the facts and if necessary, advise your employees so they can spend their FSA funds.
Medical/Dental Deductible: Check the effective dates for change as a result of leaving the PEO. PEOs can have one standard date but others grant each company the option to choose their date. Employers need to make sure that if the deductibles and out of pocket maximums do reset that employees are informed that they may have extra out of pocket expenses.
COBRA: After leaving the PEO the PEO can charge fees to manage COBRA members.

When committed to leaving a PEO a trusted benefits advisor that has experience in helping companies exit PEO’s can be invaluable. They will help you pull together benefits, payroll, 401k, LTD, STD, life insurance, liability insurance and more. This is the perfect time to tie it all together with modern HR technology, including a benefits administration tool. You’ll be glad you did.

What do Payroll and Benefits have to do with making a great work culture? Let’s talk about it.