February 12, 2025

Acquanyc

Health's Like Heaven.

Small companies get new ICHRA tool to help workers buy health coverage

By Michelle Andrews, Kaiser Health News

Until October, Andrea LaRew was paying $950 a month for health insurance through her job at the Northwest Douglas County Chamber & Economic Development Corp. in the Denver area.

Her company didn’t contribute anything toward the premium. Plus, LaRew and her husband had a steep $13,000 deductible for the plan. But the coverage and the premium cost were in line with other plans available to the company since options for such a small work group — just LaRew and another employee wanted to enroll — weren’t plentiful.

Now they’re trying a new approach. Instead of a traditional plan, the chamber established an “individual coverage health reimbursement arrangement” (sometimes referred to as ICHRA) to which it allocates $100 a month per employee that they must put toward comprehensive coverage on the individual insurance market. These employer contributions may be used to pay for expenses such as premiums or cost sharing.

The reimbursements don’t count as taxable income to workers.

Proponents of the plans say they’re a good option for companies that may not feel they can afford to offer a traditional plan to workers but want to give them something to help with health care expenses. But consumer advocates are concerned they may shortchange some workers.

These small businesses can’t afford to offer health care coverage as the premium prices rise, said Garry Manchulenko, a principal at GMBA Advisors Group in the Denver area, who suggested the arrangement to the chamber. “They want to help their employees, but they can’t sustain these increases, particularly at the small-group level.”

Manchulenko said he’s suggesting the new setup for some of his clients, noting that in certain places premiums on the individual market are lower than those for group plans.

LaRew, 48, bought a plan similar to the group plan, but with a monthly price tag of $730 after she factors in the company’s contribution, a savings of more than $2,600 a year.

“It’s still super expensive for two healthy people,” said LaRew, who oversees many of the chamber’s administrative functions. But she appreciates that her premiums are deducted from her pretax income, just as when she was on the group plan.

She also liked having her pick of several plans. “I could choose my own individual plan that suits my family best, and not be tied to a group plan that works great for a co-worker but not for me.”

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