As employers face a continued rise in healthcare costs, ICHRAs do hold promise, but barriers to adoption remain, according to a new survey.
The Employee Benefit Research Institute and Morgan Health teamed up to poll 984 benefit decision-makers at employers across a variety of sizes between March and May, and found that more than a third are either planning or evaluating an individual coverage health reimbursement arrangement, or ICHRA.
However, just 11% said they are currently planning implementation, suggesting that many employers are still in the process of gathering information rather than making changes to their benefits packages.
Under an ICHRA, an employer offers workers a stipend to purchase coverage of their choosing on the individual market, rather than providing a broader benefit across all employees. Proponents of the model argue it offers consumers greater choice and employers flexibility in their benefit offerings.
"The key takeaway is that there is a lot of interest," said Paul Frontin, Ph.D., director of Health Benefits Research at EBRI, in an interview. "I try not to overhype the numbers but just to take them as a message that employers are certainly thinking about ICHRAs."
Awareness of ICHRAs was mixed, with six in 10 of the surveyed employers saying they were at least somewhat familiar with them. Knowledge was low among smaller employers that do not currently offer coverage, one of the areas where this model has the most potential.
In fact, the survey found that interest was the highest among employers with at least 100 workers, with 62% saying they were either somewhat or very likely to offer an ICHRA in the next two years.
By comparison, 55% of small employers that did not offer health coverage were unaware that ICHRA was an option available to them, the survey found.
That lack of understanding was the largest barrier to wider ICHRA adoption. The market is currently small—Frontin said about 1 million people nationally are enrolled in one—but many insurers are bullish on their potential.
In addition, while affordability for employers was cited as a key boon in the survey, concerns about the stability of the individual market were also highlighted. Employers expressed worry that premiums and out-of-pocket costs in this space may be out of reach for workers, and were unsure if the plans and network quality would be up to par.
Employers were also skeptical about the administrative work necessary to manage an ICHRA, and the complexity of the implementation. They also questioned the long-term potential of this model.
The survey found that employers were more comfortable with considering an ICHRA if they could ensure that benefits and provider networks were similar to their existing plan. Broker or consultant support also boosted interest significantly, with 77% saying their recommendation would make them more likely to offer one.
Frontin said that employers will generally be hesitant to make a massive change in health benefits, which serve as a critical tool for recruitment and retention. For ICHRA's to truly take off, it will likely require a large player to lead the charge on the switch.
"They're going to be hesitant to be the first one," Frontin said. "There's no poster child yet for ICHRAs."