There’s no doubt that the COVID-19 pandemic has had an economic impact on healthcare expenditures. And with the financial strain that has been placed on many businesses, employers have had to re-evaluate their healthcare benefit offerings, which has brought an increased interest in Individual Coverage Health Reimbursement Arrangements (ICHRAs) and Reference-based Pricing (RBP). These cost-saving strategies help allow businesses to gain greater control over their benefits budget and enable flexibility for employees to find healthcare without the in-network limitations.
Let’s have a closer look at how individual healthcare coverage has become a rising interest in the United States.
Why is Individual Coverage on the Rise?
The pandemic has set back quite a few businesses and has also resulted in massive downsizing and budget cuts. With healthcare being such a large expense in an organization’s budget, employers are finding new ways to contain costs and keep their employees covered. As a result, they’ve been looking towards non-traditional benefit plans such as ICHRA and RBP to maintain healthcare coverage for their employees during these difficult times.
"If we breakdown the spending according to employer and employee contribution, we can observe a 13% increase in worker contribution in the past 5 years, whereas the employer contribution continues to be nearly three times more."
Employer and Employee Premium Contribution Stats
According to a 2020 annual Employer Health Benefits survey by the Kaiser Family Foundation, there has been a drastic 55% increase in healthcare insurance premiums in the past decade. If we breakdown the spending according to employer and employee contribution, we can observe a 13% increase in worker contribution in the past 5 years, whereas the employer contribution continues to be nearly three times more.
What are ICHRA and RBP?
ICHRA refers to Individual Coverage Health Reimbursement Arrangement and is a comprehensive health benefits plan that small and large companies can offer to their employees. Through ICHRA, companies have the option of reimbursing their employees’ individual healthcare premiums and expenses without having to pay tax on it. Employers can add this to the employees’ existing benefits package or use it as a separate option on its own.
Reference-based Pricing or RBP is a method that allows employers to tailor their employees’ health plans. This allows employers to set a lower insurance claim cost and also enables employees to choose providers that are not restricted to being in-network. Moreover, it can increase more transparency throughout the whole insurance process and allows employers to be reimbursed at a rate that utilizes Medicare as a benchmark.
How is it Different from Traditional Coverage?
With traditional coverage, the organization must pay the annual premium fee to the insurance carrier regardless of if a claim was created or if an employee has used healthcare services. The employee and his/her dependents are responsible for paying co-payments and deductible amounts outlined in the policy.
Self-insured plans are funded by the employer and avoid the cost of high premium fees. Employee claims are only charged as they occur and premium taxes are avoided. Under this coverage, employers gain more customization over the plan design and also have the opportunity to receive unused funds at the end of the year.
How can Healthcare Concierge help you?
Education is key when it comes to employee benefits. If your organization is considering moving towards one of these cost-saving strategies, it’s important to provide transparency and information regarding the benefits structure that has been adopted.
It can be a daunting task for employees and employers to navigate their plan offerings, especially when it comes to non-traditional coverage. With TouchCare’s concierge services, we provide members with a centralized support team that provides easy-to-understand guidance, 1:1 support, RBP model education, and solve all your complex issues for you.
To learn more about adopting RBP coverage, check out our recent webinar, “Navigating Complex Benefit Strategies: Reference-Based Pricing”.