Fast Break: ICHRAs – Facts, Myths and Making the Right Choice

Matt Cranney

Welcome to the fast break. Today, I have the pleasure of hosting 2 guests whose voices may be familiar to you as they are returning guests to the show. Becky Menefee, Vice President of M3 Elevate and Natalie Damro, Client Executive at M3 Elevate. We know that running a small business requires you to wear a million hats and offering health insurance can feel like another burden’s juggle.

Today, we’re exploring individual coverage HRAs or ICHRAs. A new option that might seem like a magic solution, but ICHRAs might not be a one size fits all answer. Both Becky and Natalie have experienced in the world of ICHRAs, a topic that is gaining publicity really rapidly. So I’ve asked Becky and Natalie to help us out.

A recent study by the Kaiser Family Foundation shows that while 49% of small businesses offer health insurance, many struggle with rising cost. ICHRAs can offer some flexibility, but they also come with a lot of administrative duties. So is an ICHRA the right superhero for your healthcare woes? We’re here to separate the hype from the reality.

We’ll dive in today with Becky and Natalie to dissect ICHRAs, explore their potential drawbacks, and ultimately help you decide if they’re a good fit for your unique small business. Stay tuned and get ready to make informed decisions about your team’s health and your company’s.

01:32 Matt Cranney

Becky, Natalie, welcome back to the Fast Break.

While I very much am the person on this call who knows the absolute least about ICHRAs of the two of the three of us, I’m hoping that you can get us started today by maybe just explaining what even exactly is an ICHRA and how does it differ from traditional group health insurance plans.

01:58 Natalie Damro

Traditional group health insurance provides standardized coverage for a group of employees where an ICHRA offers individualized coverage for with more flexibility and cost control. So understanding the unique needs of your organization and employees can help determine which option is most suitable for your situation.

02:18 Matt Cranney

Becky, can you? Anything you want to add to that?

02:20 Becky Menefee

No, I think she buttoned that up eloquently as basically a mechanism for you to give employees dollars to purchase their own individual coverage in a very compliant way.

02:32 Matt Cranney

I’m hoping maybe you can walk us through what are the key benefits to leveraging an ICHRA and why is this topic everywhere we look these days?

02:43 Natalie Damro

Good question. You know, ICHRA provides employers with a lot of flexibility with contributing towards premiums and offers, you know, a wide range of choices for their employees. It does level that playing field by removing restrictions on the business size and offering, you know benefits through the ICHRA can be a game changer for attracting and retaining talent as it does allow those employees to have that flexibility and choose the plan that best fits their need.

It also provides flexibility in, you know, hiring across state lines or if you have more of a remote workforce. And unlike group offerings with yearly premium increases, ICHRA does allow employers to set their spending amounts and eliminating that risk of a bad claim year or rate increases and really protecting the bottom line.

03:30 Matt Cranney

Becky, anything from you on this one?

03:32 Becky Menefee

Yeah, I think maybe to maybe button up the why do they seem to be everywhere question I think you know these are gaining a lot of popularity in the past few years with more and more employers really struggling with the double digit increases that they’re receiving year over year.

Our changing workforce is also exacerbated that a little bit. So you’re now having a more diverse workforce, aging as well as some new youngsters coming in, and so now that employer now trying to find that one size that fits all plan is becoming more of a more of a struggle as well as meeting those budgetary needs.

So I think these are becoming more and more popular just because of what we’ve seen in the market and just in the changing landscape of the employer space.

04:15 Matt Cranney

So I hear you on all those things about why they’re everywhere and ad maybe some of the key benefits, if I’m a small business owner but I’m also curious, and obviously we referenced this in in the show opening. What are some of the drawbacks? What are some of the, you know, the reasons why maybe an ICHRA might not be that magic bullet for any small businesses listening today, maybe you could speak to that.

04:39 Becky Menefee

You know, I think for me it’s I always try trend lightly on the drawbacks. Because to me it’s an eyes wide open discussion, right? Because I think as much as you just have awareness about what you’re jumping into, I think is what is more important. So you know what could be viewed as a drawback to some may not be a drawback to others, just something to be aware of.

So for me, the things that we’ve seen just is that it creates a little bit of complexity for your employees. You’re opening up an entire market for employees. There’s a lot of noise in the market. What’s the right plan, the right solution for them. So you’ve no longer narrowed that down for them and now they have a world of choice in which they are now jumping into.

There’s also some increased administrative responsibilities for the employer, so sometimes employers feel like just because I’m giving you dollars to purchase that plan that that I’m now removing myself from some sort of administrative work that might be behind the scenes. So that is absolutely not the case. So it’s just something to think about as well.

So if anyone in your group currently is receiving a subsidy, so if you know of anybody who’s out currently on the exchange health exchange receiving a subsidy, they are no longer eligible if you offer an ICHRA. So that would be a drawback potentially within your population.

Likewise, if you know of anybody in your population that is seeking government health assistance there could be some impact there, so affordability becomes incredibly important and we’re here to help with that as well.

If you have anybody in your population that is Medicare eligible, the only option they will have is to enter into the Medicare market. So they might be engaging in your healthcare plan because it might feel a little more rich than what they might receive out in Medicare, but they can absolutely use their HRA dollars for Medicare premiums if they’re in a supplement. So that’s it. That’s something just to note.

And the biggest thing for me, I think that we get into with employers is timeline. So ICHRAs due state that there is a 90 day notice to implement and to renew an ICHRA. Then during COVID, there was a little bit of flexibility here and the wording was changed to “reasonable notice”. So there’s a little bit of gray area on said 90 day notice and I think you might get some varying opinion if you were to talk to people about this.

But what I would say from our lived experience, Natalie and I have implemented a number of these over the past few years, that I would say it takes about 90 days. If not, maybe a little bit more to get yourself acclimated to get your population comfortable with what you are offering and to keep that noise as minimal as possible.

And I think at the end of the day, it just is so incredibly important to think about that fundamental change you’re making to how you’re offering benefits to your employees.

There’s other little nuances to the one-one market, I’m sorry in individual health renews January 1st. So if you’re going off cycle, you know your deductibles are going to refresh, your employees are going to have an event at premium at one-one. So just some things to think about, new hires, terminations, all kinds of things, get a little bit tricky from an administrative standpoint in an ICHRA, but things to think about.

07:47 Matt Cranney

Yeah, for sure. I love what you said back at the start of your answer there about advantages and drawbacks might not be the right terminology, because really it’s about what is the right fit for your own organization and what you know. We might think of as, you know, a drawback in terms of, gosh, it’s such a massive change, you know from employees who have purchased health insurance through their employer for so long. Well, if you’re a company that either hasn’t offered it or, you know, maybe has a younger employee population base, maybe that’s not so much of a negative. And so, I love how you’re sort of framing, framing that out for us.

Natalie, I’m going to come to you next with this next question. So and really, I hope these questions are not too basic. I’m really trying to think about this from a our audiences perspective. If this is either a new topic to them or they’ve just, you know, kind of seen things whether on LinkedIn or in places like that.

But if I’m an employee of a of a small business and you know that my employer leverages an ICHRA, can you walk me through what that experience would look like? Because obviously it’s very, very different than sort of the employer sponsored health plan model, right? Where like, you know, I wait till the end of the year. My employer tells me, hey, Matt, your insurance premiums are going to be this much and we’ll take it out of your paycheck. And so if we move forward. Can you, Natalie, talk to that experience? Cause I think you know, if I own a business that’s maybe one of the biggest things that I want to think about in terms a potential impact.

09:18  Natalie Damro

You know, instead of being offered one, two or three different options, you will now have, you know, a plethora of options that you can choose from, which can be a little overwhelming for most. So, we do recommend utilizing a third-party vendor wherever it’s possible. The vendor which your employer chooses to partner with will have resources to help kind of guide you through that process of making the best choice for you and your family.

And these specialists that you would work with will gain a better understanding of what your needs are, maybe what doctors and hospitals that you have relationships with, what prescriptions you might be taking and that will come full circle and they’ll be able to give you the best-case scenario for you to choose from.

And you know with that being said, too many choices can make the process a little confusing. But that’s exactly what that support is there for. So, you don’t have to go through it alone or feel like you’re, you know, off on an island to make that choice. That’s what that support is for.

And then, you know, once you kind of come full circle and make that choice, your ID cards will be sent out to you just as they would on your traditional group plan.

10:22 Matt Cranney

So you know, maybe some similarities, right in terms of, hey, I end up with an ID card, I end up with, you know, doctors and places that you know to go and seek care, but just maybe the sort of how you get there and that sort of more burden of choice is shifting from the employer to really the employee. That’s where that experience feels, feels more different.

I understand and I think we’ve referenced it already today, you know the compliance and regulatory aspects of overseeing our ICHRA plan. Could maybe be more or you know, maybe even the word significant. Becky. Maybe I’ll come to you on this one. Can you talk through what my experience would look like as an employer if I decided I wanted to go this direction because Natalie did a beautiful job sort of walking it through from Matt employee. But what now about Matt, Business owner. What? What does my experience look like?

11:14 Becky Menefee

Yeah. So actually I think this is kind of interesting. I think a lot of employers, when they start engaging with us, actually feel like by doing so, they kind of get to remove themselves from not only the decision making of the plan, but also the compliance pieces that they were responsible for before. But this is actually not the case at all.

So by offering just that HRA in and of itself, you are offering an employer sponsored plan, so you are still responsible for things like WRAP documents, cover notice as 1090 fives all the same things that you were doing before within your health plan. You still have to do today because of the HRA components.

The only thing I would say is that you might remove yourself from which you could feel good or bad about depending on your perspective might be and how you may or may not be able to advocate for any of your employees should they experience a claim issue or something wrong within their plan or question about how something should be covered or where to go for care, because remembering now you have you have no control over what plans your employees select, what carriers they select. So that advocacy piece and because they are the policyholder, they are the only ones that can really advocate for themselves on the carrier level. So that that will also feel very different to your population. Some like that and some do not. So just something also for you to consider from an employer’s perspective, but otherwise everything else stays in play. You’re still administering a plan.

12:44 Matt Cranney

Yeah, that’s I. I love that Becky and and I love that you use the word misconception, right? Because, you know, at least the things that I’m seeing sometimes that it’s kind of like, hey, you know, are you tired of the burden of administering your health plan then now we have a different option for you and, you know, hey, all you need to do is give your employees, you know, these funds on a monthly basis. And we sort of keep moving. Clearly not the case.

So, you know, with everything being said so far around. It’s not advantages or disadvantages. It’s really about the right fit. Natalie, I’m going come to you on this one. I’m hoping that maybe in in a very general way, maybe you could describe a business that you know that you think would be an excellent fit to leverage an ICHRA and a business maybe where you would think it’s not such a great fit. And not that we’re at you know providing sort of you know two boxes that people can sort of fit into because we understand every business is unique and every business is different. But I’m wondering if you can speak at a high level based on your experience of putting some of these things into play for clients about where that you know, potential good fit might be and where maybe that the struggles would be does that make sense Natalie?

13:56  Natalie Damro

Yeah, makes sense, I can definitely touch on that. But I do think it’s important how you kind of look at the question, the ICHRA is a solution for almost anybody. So any small or large businesses that struggle, you know, maybe to provide competitive employee benefits, maybe high turnover startups and growing companies, if you have any of the those diverse demographics such as like a different age group, different locations, remote workforce that we had alluded to before. It is just important to consider those specific circumstances, and one aspect to really keep in mind is, if you have a low-income population that might be leveraging those government assistance programs and the subsidy dollars on the exchange. In some cases it may, you know, just be necessary to carefully evaluate the impact and the affordability for the business and the employees.

14:47 Matt Cranney

Really well said, Becky. Anything you would add to that in terms of things that you’ve seen or worked through?

14:52 Becky Menefee

Yeah, I think it’s just kind of a mixed hat based off of your benefits philosophy, how you choose to administer benefits to your employees, your focus on attracting and retaining talent and really again, just to our points before you, you said it as well before Matt, you know it really depends on your unique situation, your unique population and you know it better than we do. We’re here to kind of help you decide whether or not is the best path for you and your population based off of your budget and your needs.

15:23 Matt Cranney

You know, as people are listening today, you know our hope in in doing you know this this podcast and other things we’re going to reference a little bit later is really to just provide clarity because I I think the one thing that is still  true with ICHRAs or group plans is you want whatever you are doing to be sort of a values based decision, right?

So Becky, I love that call to you know really think about before you get to solutioning, let’s think about hey, who are we as a business, what’s important to us. What’s not important to us? What are our values and then seeing which path that sort of leads down versus hey I heard an ICHRA might be easier, so let’s do that.

I think that’s a really, really wise call to action for our audience. So we’ve covered a lot in a short space of time. Hopefully people are still hanging with us and that they’re still really interested in this topic.

But as we wrap up this segment of our conversation are there any last words of wisdom for the audience that you that you both would have, or any places that you would point our audience to if a, you know, twenty-some-minute podcast, we can only scratch the surface. There are other places you point us to. If we have further questions on ICHRAs, maybe Natalie, I’ll come to you first and then maybe Becky after that.

16:46 Natalie Damro

Yeah. Thank you, Matt. We are hosting a few webinars in the coming weeks to dive a little bit deeper on the ICHRA solution. And registration is open for those out on our website at m3ins.com. It is on our events page and then we will also have some articles for you to touch base on our Insight Center As well.

17:07 Becky Menefee

I think for me, in the end, I think it’s important to just not go it alone. I think it’s important to partner with a skilled agent who has expertise in the space, which is hard to say because these things are so relatively new. They’ve only been around for a few years. So not all agents actively engage in ICHRAs.

We actually recently met with a client of ours and now clients who was interested in in an ICHRA wanted to know if it was the right solution for them and they had engaged with their agent at the time and who shared with them. It’s just not something that they do and had given them a phone number to the direct vendor to just go direct with them on.

And for everything I’ve said before, I know I mentioned before Natalie and I have implemented a number of these. I don’t think we’ve had a single one that hasn’t required some level of intervention along the way during that implementation process. So to me, for an employer to go direct feels a little like a bit of a scary place and something that’s relatively new, so whether it’s M3, whether it’s anybody else out there in the street, who you partner with becomes incredibly important, so please be sure that you’re working with a skilled agent and remembering this is a big decision that you’re making. You don’t want to go it alone and you want somebody in the ring with you the whole way.

18:24 Matt Cranney

Your point is really well made in terms of this is a relatively new space. Yes, we see it picking up traction in terms of interest and engagement. We see the number of conversations people want to have about it, right rising.

Three years in, health insurance is very, very new, right? And so, you know what? This will end up becoming eventually might not be what it exactly is today. And so, you know, your call to action for people to make sure that they feel like they have a trusted advisor with them as they navigate the space, I think is a really strong one, and maybe something people would assume. 

But you can never with this assume that because again, what we’re seeing is like, hey, this is the easy option and again the common theme through our conversation today is that is not the case. In fact, because of the change in behaviors and other things that are required this actually might be a more complicated option for some, if you add that to the changing environment even more of a need for that trusted advisor. So thank you for for calling us to that.

OK, Becky, Natalie, awesome job. Hopefully our audience is much more prepared and thoughtful now around the topic of ICHRAs and again, and we’ll reference it at the end. We do sense this need at M3 elevate and so we are creating more resources, we are trying to figure out different places and spaces to show up with more ways to help educate so stay tuned to all of you know our it’s as Natalie said our website or social channels all the places and spaces for more connections to that.

But as always on the Fast Break our last set of questions is the fastest break set and we’ll do this rapid fire. But because both of you are returning guests, I couldn’t go back to our standard questions so I had to come up with some new ones. So hopefully we’ll just kind of work through this you can still give an off the top response and then we’ll move on to the next one.

20:21 Matt Cranney

Natalie. Coming to you, first favorite movie you’ve watched in the last 12 months,

20:27 Natalie Damro

Inside Out 2

20:28 Matt Cranney

I love that it’s a great movie. Becky, what about?

20:31 Becky Menefee

You not new within the last 12 months, but my husband and I recently watched Koda and loved it.

20:36 Matt Cranney

Awesome. OK, next I’ll come to you first on this one complete the sentence courage is.

20:42 Natalie Damro

Contagious.

20:44  Matt Cranney

Oh, I love that. Becky, what about you?

20:46 Becky Menefee

Courage is being authentic and not taking yourself too seriously.

20:51 Matt Cranney

I love that. Natalie, what historical figure would you most like to have dinner with?

20:56 Damro

Susan B Anthony.

20:57 Matt Cranney

Love that, Becky. What about?

20:59  Becky Menefee

You RBG all the way.

21:02 Matt Cranney

I love that that would. I would pay money to see you. 2 have dinner. That would be. That would be incredible. Natalie, your favorite karaoke song.

21:09 Natalie Damro

Let’s go, girls. Let’s kick those doors down.

21:13 Matt Cranney

I love it. I love it. Becky, what about you?

21:16 Becky Menefee

Oh, I don’t karaoke much, but the last song I did was total eclipse of the heart by Bonnie Tyler.

21:20 Matt Cranney

OK, Natalie, what’s the most beautiful place you’ve ever visited?

Natalie Damro

Hawaii.

Matt Cranney Becky Menefee Natalie Damro

Becky, what about you?

21:28 Becky Menefee

For me, Anguilla, it’s a beast to get to. But it’s a postcard vacation.

21:33 Matt Cranney

OK, Natalie, last thing you did that made you laugh out loud.

21:36 Natalie Damro

Oh gosh, I lost my footing and fell down my basement stairs with a full basket of laundry. Felt like that was 90 years old the next.

21:41 Matt Cranney

OK, I didn’t know that, and I’m hoping you’re OK. Yeah. So. So OK. OK, good. Alright, Becky, what about you?

21:50 Becky Menefee

Well, you know, I have many humbling experience. It’s hard to pick just one, but most recently I was on a work trip with some colleagues and was rolling my luggage in front of me, exiting a plane and my luggage caught the edge of a seat just right and had full audience behind me as I tumble full tumble over my luggage, I hear a guy three rows behind me go Oh no. So that was probably the one, maybe the last. I didn’t stick the landing on that one, I will say out loud.

22:22 Matt Cranney

I love it. OK, not for you. But now that you’re OK on the backside. It’s funny, though. It’s funny. OK, Natalie. What’s something you’re passionate about that not many people know about you?

22:29 Natalie Damro

You, I would say definitely my yard. It’s something about the lines in the grass that’s satisfying.

22:35 Matt Cranney

Yeah. You gotta stripe. Yeah, I’m a big stripe guy. Big stripe guy. OK, Becky, what about you?

Becky Menefee

Hot yoga

22:42 Matt Cranney

Awesome. OK. Thank you both for being willing to do that. Thanks for being willing to do this whole episode and before we wrap up today, I’m hoping maybe you can share and remind people where people can find you, find out more about Elevate and ICHRAs and what’s the best way to connect with you moving forward?

23:00 Natalie Damro

Yeah, definitely. You can find all of our information out on our website at m3ins.com. Be sure to also check out our events and Insights page for our information on Elevate and ICHRA. We have a few open webinars on IRAS coming up and if you’re interested in learning more, we hope to see you there.

23:19 Matt Cranney

Becky and Natalie, thank you so much for being willing to join me today on the fast break and for sharing your insights and wisdom with our audience. We really appreciate it.