Summary
Key findings in the report include:
- Employer awareness of ICHRAs varies. Nearly six in 10 employers reported being at least somewhat familiar with ICHRAs, with familiarity highest among large employers that currently offer health benefits. Awareness remains lower among small employers that do not currently offer health coverage.
- More than one-third of employers reported that they are actively planning or evaluating an ICHRA. However, only 11% said they are actively planning implementation, suggesting that many employers are still gathering information rather than preparing to make an immediate change.
- Employers currently offering health benefits show notable interest in possible future adoption. One in three businesses currently offering health benefits reported likely ICHRA adoption in the next two years. Interest was strongest among employers with 100 or more employees, with 62% reporting they were somewhat or very likely to offer an ICHRA in the next two years after reviewing a description of the arrangement.
- Small employers that do not currently offer health coverage may represent an important segment for future ICHRA adoption, but awareness is a major challenge. Among small businesses not currently offering health coverage, one in four indicated a preference for an ICHRA over a traditional group plan. However, 55% of these employers were unaware that ICHRAs are available to them today.
- Across employer sizes, the most frequently cited reasons to consider ICHRAs were flexibility in benefit design (51%-61%), increased employee choice (38%-65%), and affordability for employers (47%-54%). Among employers that do not currently offer health benefits, ICHRAs were viewed as a possible pathway to providing coverage that may otherwise be difficult to afford or administer.
- In addition to lack of understanding of ICHRAs, concerns about the individual health insurance market remain the largest barriers to adoption. Employers expressed widespread concern about whether individual market premiums and out-of-pocket costs would be affordable for employees. Employers also cited concerns about provider networks, plan quality and employees’ ability to shop for and choose coverage that meets their needs.
- Operational and administrative challenges also remain important considerations. Employers reported concerns about compliance requirements, implementation complexity, the staff resources needed to manage an ICHRA, and uncertainty about the long-term stability of ICHRA policy.
- Employers identify clear factors that could increase adoption. Employers said they would be more likely to adopt ICHRAs if they could obtain the same quality of provider networks and choice as group plans. Broker and benefits consultant recommendations are influential, with 77% of employers saying a broker or benefits consultant recommendation would make them more likely to adopt an ICHRA and 76% saying a peer business offering an ICHRA would make them more likely to consider one.
- Policy and market changes could play a significant role in future adoption. Employers indicated that tax credits, a more stable and affordable individual marketplace, simplified compliance requirements, stronger employee education, payroll integration, claims and reimbursement support, and access to high-quality health plans could increase interest in offering an ICHRA.
- Among targeted strategies, employers expressed the greatest interest in using ICHRAs for all employees (78%). Among targeted groups, employers preferred using ICHRAs for remote employees (66%) and new hires (66%) over part-time workers (47%) and seasonal workers (42%).