Employees Struggle to Navigate ICHRAs as Decision Tools and Protections Lag: Matthew McGough, MSPH

Employers who adopt individual coverage health reimbursement arrangements (ICHRAs) may report that their employees are paying less towards their health insurance premiums, said Matthew McGough, MSPH, a policy analyst at KFF for the Program on the ACA and the Peterson-KFF Health System Tracker, in an interview with The American Journal of Managed Care®.

ICHRAs have been growing in popularity, but not without skepticism. While some consumers think they are inferior to traditional health plans, McGough said employers that invest in support tools for employees to navigate the individual marketplaces report high utilization and value.

Transcript
This transcript has been lightly edited. Captions are auto-generated.

How prepared are employees to navigate the individual marketplace on their own, and what tools, decision supports, or protections may be lacking?

We hear from employers that we have interviewed over the last few years here at KFF that many of them have to actually, in the short term, increase their administrative costs and the time that they put into every open enrollment period or meeting with employees to talk through what it's like navigating the individual market, because most employees are not well prepared to shop for their own coverage. Typically, under a group arrangement, there's 1 or 2 carriers that the employer has contracted with, and there's a very limited selection that employees are choosing from. But now, employees have the ability, through ICHRAs, if their employer has decided to take it up, to choose among a wide variety of different plans with different network sizes, cost sharing, and drug formularies that, even for experienced consumers, can be really hard to navigate.

By some estimates, there are upwards of 20 or 30 different plans that some consumers in specific areas can choose from. Having decision support tools usually provided by the employer, personalized guidance, whether it be through the employer's agent or broker or their HR staff, and having a clear explanation of the tradeoffs are often lacking. But when employers do invest that into their employees, when they are moving to this new arrangement, it is usually highly utilized by employees and highly valued as well.
There are common misconceptions that the individual market coverage is inherently inferior to group coverage, so it usually takes some explaining by the agent or broker, the vendor, and the HR staff that, in reality, these differences are more nuanced, and that this is simply a different way of obtaining coverage. And in many cases, employers have reported to us, at least anecdotally, that employees are paying less towards their health insurance premiums under this ICHRA.

There are certain tradeoffs that employees may feel. They may believe that it is inherently inferior coverage, even though the differences are more nuanced, but they often realize that they are paying less for their coverage, at least in the short term.

Can you explain how the ICHRAs differ from QSEHRAs and what could influence their adoption if the enhanced premium tax credits change or if the regulations are codified into law?
ICHRAs are part of the conversation right now, but what's actually been around a little bit longer than ICHRAs is QSEHRAs, or qualified small employer health reimbursement arrangements. And under that arrangement, which was created at the tail end of the Obama administration, consumers can actually combine their employer contributions with their marketplace subsidies. If there is anything that's over the amount that they will qualify for in health marketplace subsidies, that’s above what the employer is contributing, they can receive that difference. That may be one area that continues to grow and will operate a little bit differently if the enhanced premium tax credits do permanently expire.

There's also been talk in Congress when different deals have come up, different bipartisan deals. Codification of the ICHRA regulations into statute, into law, has been talked about, and that would, I think, attract more employers to the ICHRA space, because once it is codified into law, there's a little bit less uncertainty about if this is something that could just change from administration to administration or party to party; it's a little bit more set in stone.

There’s a lot up in the air right now in this space, certainly not just in the ICHRA regulations themselves, but in how they interact with these marketplace subsidies. I would say the next few years will be critical to understanding what the future of this market really looks like.