For 15 years, a family-run construction company in Georgia offered its team the same healthcare options: three plans, take your pick.
The person handing out those three options was Sherry, who runs HR and accounting for the company. She chose which plans were offered to employees, then fielded the inevitable questions. And every year she made the same uncomfortable calculation: deciding what coverage was good enough for her coworkers, who all had different doctors, prescriptions, and family situations.
She had one rule she refused to break: No bronze plans.
“If I have to choose, and I’m limited to three, I’m not giving them a bronze plan,” Sherry said. “Oftentimes they just don’t give them the coverage that they need. And so down the road, it makes no sense for them.”
That rule was eventually the straw that broke the camel’s back.
The Group Plan Falls Apart
The company has about 25 employees, with between seven and eleven taking coverage in any given year. They were rated through a Chamber of Commerce pool, which kept rates manageable for a while.
Then two employees got sick. One had a serious kidney disease, and the other had a heart condition that required open-heart surgery.
In a group that small, two catastrophic claimants is enough to reset the math for everyone. The renewal came back at a price the company could not carry.
The options Sherry faced were the ones every small employer has to deal with eventually:
- Absorb the increase
- Push the cost onto employees who could not afford it
- Drop the benefit altogether
None of those worked. As Sherry put it, unless the company contributed an exorbitant amount, the cost of coverage was going to outpace what people were actually earning. A benefit that eats a paycheck is not much of a benefit.
The company could have solved the price problem by adding a bronze plan. But a bronze plan would not solve the coverage problem, which was what Sherry cared most about.
Making the Switch to ICHRA
One day, their insurance agent asked whether they had looked into ICHRA.
An ICHRA (Individual Coverage Health Reimbursement Arrangement) works differently from a group plan. Rather than everyone being lumped into one plan that may or may not work for them, the employer sets a monthly amount it will contribute toward health benefits. Then employees buy their own individual coverage, and the employer reimburses them through an administrator.
The dollars matter, but the dollars are not the real change. The real change is who gets to make decisions about coverage.
Under the old model, the employer chose the plans and the employees lived with the consequences. Under ICHRA, the employer decides the budget and who is eligible for it. The employee is then free to shop for coverage that fits them and their life.
“They know themselves better than we do,” Sherry said. “It started with the cost, and then it went to employee choice.”
HRASimple Enters the Picture
When a business moves to ICHRA, the owner makes the strategic decisions that shape the company’s benefits: things like budget, which employees are eligible, etc. They also remain the plan sponsor, which means the legal responsibility for running a compliant benefit stays with the business.
Hiring an ICHRA administrator moves the execution off the owner’s desk. An ICHRA is an ERISA-governed health benefit, so it requires diligent administration to make sure the benefit is compliant and functioning correctly. ICHRA administrators handle the documents, notices, verification, reimbursements, and employee questions that used to come to the front office.
The construction company signed HRASimple to be its ICHRA administrator, and HRASimple got to work helping them with enrollment.
“The [HRASimple] team was there and available for my employees when they needed help”
These employees had been with the same carrier for over 15 years, so there was a bit of a learning curve when they made the switch to ICHRA.
Most of them had never shopped for their own insurance before, so they had a lot of questions about how to find a plan that fit their needs. Some employees started receiving bills from their carriers in the mail and, under the impression that they were on the hook for payment, panicked a little bit.
HRASimple’s team was there to walk them through all of their questions, and to assure them that those bills were being handled through the ICHRA. And because construction employees are on job sites during normal business hours, HRASimple’s team stayed available after hours to field calls and answer questions.
“The [HRASimple] team was there and available for my employees when they needed help,” Sherry said. “They did need some extensive help.”
Silence is Golden
Today, about nine of the 25 employees are participating in the ICHRA. The rest are on a spouse’s plan or covered somewhere else. Nobody is being chased to sign up to keep the arrangement viable, because ICHRA has no minimum participation requirement. That alone removed a recurring headache from Sherry’s life.
Those nine employees choose from roughly twenty options instead of three. Someone with ongoing medical needs can buy a platinum plan, while someone young and healthy can pick a leaner plan. According to Sherry, some employees who could not afford the old group plan are covered now.
Sherry’s biggest relief is that she is no longer in charge of picking plans that employees may or may not like. She doesn’t have to field complaints or feel the burden of putting somebody on a plan they resent.
Instead of complaints, she hears employees comparing notes with each other. They tell coworkers which plan they picked, which company was good to deal with, what they would do differently. One plan has become popular around the shop because enough people had a good experience with it and said so.
“What I don’t hear is complaints about the insurance,” Sherry said. “And silence here is golden.”
Switching health benefits strategies comes with an adjustment period, and there are still some things Sherry and her team need help with during enrollment each year. Now she has a team at HRASimple to call with questions.
“I can deal with a little bit of the frustrations. It’s important that my employees don’t have to. And they don’t. The customer service we’ve gotten has been above and beyond.”
If your renewal came back at a number that isn’t tenable for your business, there is another way to run this. Schedule a consultation and we will show you what a new healthcare strategy could look like for your business.