State of Current Healthcare Legislation: ICHRA, ACA, and More

Laws and rules for healthcare in the U.S. are complicated and constantly changing. They affect people, companies, and doctors in significant ways. The health insurance and benefits that people and families depend on, the costs companies pay, and how much doctors get paid all change because of new laws and rules from the government and states.

The current state of healthcare legislation involves proposed initiatives like expanding health reimbursement arrangements, increasing association health plan availability, and potential changes to the Affordable Care Act (ACA)(2) through executive and regulatory actions. The COVID-19 pandemic has also underscored shortcomings in the U.S. healthcare system and intensified calls for reform. While sweeping changes through Congress remain elusive, incremental shifts through state and federal agencies continue to alter how healthcare is financed, delivered, and accessed across the country.

To help you navigate this complex landscape, this article will analyze critical pieces of current healthcare legislation and its potential impact on individuals, employers, and providers.

The Affordable Care Act (ACA) Overview

Since its inception in 2010, the Affordable Care Act—also known as Obamacare—has taken significant strides toward increasing the quality and affordability of healthcare insurance.

The ACA has aimed to fulfill this vision in the following ways.

1. Protect consumers from discrimination. Insurers are no longer allowed to deny coverage or charge discriminatory rates for pre-existing conditions. Annual and lifetime limits on coverage are now banned. Plans must cover essential health benefits and provide rebates if spending on non-care activities is too high.
2. Allow young adults to stay on their parents’ plan until age 26. The younger demographic faces a higher likelihood of unemployment or underemployment, which can result in limited access to job-based health insurance. However, the ACA implemented a crucial provision that allows young adults to remain covered under their parent's health insurance plan until the age of 26. This provision serves as an essential safeguard for young adults, offering protection during a crucial period of transition in their lives.
3. Make health insurance markets more competitive and transparent. The ACA created state and federal health insurance exchanges to compare plan options easily. Greater transparency around pricing and quality helps make the insurance market function better for consumers.

Understanding Individual Coverage Health Reimbursement Arrangements (ICHRA)

Individual Coverage Health Reimbursement Arrangements (ICHRA)(3) are an alternative to traditional group health insurance plans that some employers offer. ICHRA plans allow employers to reimburse employees for individual health insurance premiums and other medical expenses.

ICHRA plans to give employees more flexibility and control over their health coverage. With an ICHRA, employers provide a set amount of funds to reimburse eligible employees for individual market health insurance policies. Employers can also reimburse employees for other eligible medical expenses, such as co-pays, deductibles, and dental and vision care.

The funds provided under an ICHRA plan operate like a Health Savings Account - they roll over yearly if not used. ICHRA reimbursements are also not taxable income for employees. Premiums paid for individual health insurance plans using ICHRA funds are still paid with after-tax dollars.

ICHRA plans work best for employers with a varied workforce who desire more flexibility than traditional group health plans provide. Employees may have different health coverage needs based on age, health status, and other factors. ICHRA arrangements allow employers to contribute funds toward individualized health plans that best suit each employee.

ICHRA: Advantages and Challenges

Major Advantages

• Flexibility: ICHRA gives employers and employees more flexibility in choosing health plans and coverage levels. Employers can offer reimbursement amounts tailored to different employee groups. Employees can choose plans based on their individual and family needs, not just the options provided by their employer.
• Cost Savings: ICHRA may reduce costs for employers. They reimburse employees for an actual dollar amount rather than paying a set premium for group coverage. Employees then shop for their plans, which could be lower-cost options.
• Customization: ICHRA allows for more customized coverage. Employees can pick bronze, silver, gold, or platinum plans on the Affordable Care Act marketplace. They have many more plan choices than an employer's single group health plan.

Key Challenges

• Administrative Complexity: ICHRA requires administering reimbursement accounts for each participating employee. Employers must track reimbursement amounts, verify plan enrollment, and process reimbursement claims.
• Coverage Limitations: ICHRA employees may have access to narrower networks in certain geographies, meaning you have access to a smaller number of health providers. But because you have the ability to personalize your plan, you have the option to buy a plan in which the top doctors you care about are in-network.

Venteur specializes in handling these challenges by facilitating account administration and assisting clients in selecting the best and optimal plans tailored to their employees' specific needs.

Other Alternatives to ICHRA Available to Employers

Employers have a wide range of options while providing health benefits to their employees. These options include a traditional employer-sponsored group health plan. Group health plans continue to be the widely favored option among employers, frequently complemented by additional choices like an Health Savings Account (HSA).

These plans typically revolve around a designated network of participating healthcare providers and adhere to a PPO (preferred provider organization), HMO (health maintenance organization), or EPO (exclusive provider organization) structure.

Typically, group health plans can be categorized as either fully insured or self-funded, with the latter involving a predetermined spending threshold where the risk is subsequently transferred to a reinsurance company.

ICHRA compared to Traditional Group Health Insurance

While traditional group health insurance plans have long been the preferred choice for employers, ICHRA presents an alternative approach with several noteworthy distinctions:

• Administration: ICHRA streamlines administration for employers by alleviating the burden of managing group health insurance plans. This shift eliminates the need for employers to handle the complexities associated with such plans.
• Flexibility: The standout feature of ICHRA is flexibility because it offers employees to select individual health insurance plans that align with their specific needs, breaking free from the constraints of a uniform, one-size-fits-all group plan.
• Cost Controls: Cost control is a critical feature of ICHRA, as employers can establish a specific reimbursement amount for each employee class. It enables them to control healthcare expenses more, promoting financial efficiency and predictability.

Conclusion

The future of healthcare legislation remains uncertain as Congress debates modifications to the ACA. State legislatures also continue passing new bills to address specific needs within healthcare.

Staying informed of policy changes that impact coverage, access, and costs is crucial for individuals, families, and businesses to make the best healthcare choices for their needs in this rapidly shifting environment.

Venteur helps employers offer the best possible health benefits for their employees. Choose wisely for your small business and employees. Consult the specialists at Venteur now to join the transforming destiny of healthcare benefits!

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