About 3.5% of U.S. employers with health plans say they already offer individual coverage health reimbursement arrangement plans or similar types of “cash-for-coverage” plans, according to a new batch of survey results from the Employee Benefit Research Institute.
Roughly 15% of the participating employers with 100 to 499 employees say they have heard of ICHRA plans, are actively planning to adopt ICHRA plans, and are very likely to adopt ICHRA plans in the next two years.
EBRI conducted the survey in the spring with support from MorganHealth, the health benefits arm of JPMorganChase. The sample included 984 benefits decision-makers at employers with three or more employees. Some were at employers with health benefits and more than 100 employees, some were at smaller employers with health benefits, and some were at smaller employers with no health benefits.
See also: ICHRA popularity ‘skyrocketing’ as benefits costs rise
The cash-for-coverage plan offer rate was 4% at the large businesses, 3% at the smaller businesses with health benefits, and 0% at the smaller businesses with no health benefits. The survey report did not say what percentage of the employers’ workers were already in cash-for-coverage plans.
Federal regulation impact analysts recently estimated that the United States has 2.8 million employer group health plans covered by the Employee Retirement Income Security Act.
What it means: As many as 100,000 U.S. employers may now be offering cash-for-coverage plans to at least some employees, and about 7%, or 200,000, hope to set up ICHRA plans in the next two years.
The backdrop: Workers in many countries get their health coverage from the government or private companies.
U.S. employers typically pay for group coverage because of business practices that started during World War II, when the federal government exempted cash spent on health benefits from federal income taxes.
In recent decades, many employers and worker groups have looked for ways to let workers buy their own health coverage. Before the Affordable Care Act framework for individual major medical insurance came to life in 2014, the main obstacle was medical underwriting. Employers had a hard time setting up cash-for-coverage plans because obese employees, older employees and many other employees could not qualify for affordable health insurance.
The ACA system made cash-for-coverage plans easier to offer by prohibiting health insurers from considering personal characteristics other than location, age and tobacco use when issuing and pricing health coverage.
The cash-for-coverage plan market: Only about half of the survey participants said they had heard about ICHRAs before they took the survey.
Survey organizers dealt with ICHRA literacy issues by giving the participants a short description of ICHRA features before asking them more questions about their views about ICHRAs.
The survey results suggest that ICHRAs may be much more popular with employers that already offer health benefits and are looking for ways to cut costs or improve benefits flexibility than they are with employers that offer no health benefits.
The percentage of participants at employers that are actively planning to use ICHRAs and are very likely to adopt ICHRA plans within the next two years was about 12% at the large employers, about 8% at the small employers with health benefits, and only about 1.5% at the small employers with no health benefits.
Breakdowns by size show that just 26% of the survey participants at employers with 3 to 24 employees and no health benefits had heard of ICHRAs.
The highest ICHRA awareness level—73%—was at employers with 1,000 to 9,999 employees.
Levels of active interest in adopting an ICHRA plan ranged from 14%, at employers with 3 to 24 employees and no health benefits, up to 55%, at employers with health plans and 500 to 999 employees.
although the survey participants most likely to be trying to set up ICHRA plans soon were at employers with health benefits and 100 to 499 employees, ICHRA implementation activity seems to be almost as strong at employers with 1,000 to 9,999 employees: 14% of the participants at employers in that size range said their organizations are trying to set up ICHRA plans.
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