Why ICHRAs May Soon Be A Thing Of The Past

The pandemic has forever changed the relationship between employees and employers. As we enter our new normal, people are expecting their place of work to be there for them and their family during difficult times and to support their health needs. And as companies look to lure back workers, a system of benefits that treats them with respect will be more important than ever.

That’s why the work that the Biden Administration is doing to protect workplace health care from a controversial Trump-era regulation is so important. In one of his first acts as president, Joe Biden directed his agencies to review two particular health care rules: one that boosted junk health insurance plans on the individual market and another – a system called ICRHA – that would sever the traditional bonds of trust between an employer and its employees.

Individual Coverage Health Reimbursement Arrangements (ICHRAs) are an invention of the last administration that sought to weaken the quality of benefits that employees receive from their employers. While some brokers and insurers are hoping to make a quick buck out of this misguided system, the Biden administration has signaled that the window is closing, and that’s a good thing for workers and any employer who cares about the people they hire.

Under the scheme, employees in an ICHRA plan would no longer receive the quality group health coverage they are used to. Instead, workers would be given a stipend and forced to find coverage for themselves on the Obamacare exchanges. Plans on the exchanges often cover less or are more expensive. Workers in this system are then left to pay out of pocket for any plan that costs more than their stipend. The burden of finding the right health care plan would also be entirely borne by workers with no support from their employers.

What’s worse, the ICHRA system allows for workers to be divided into classes by their employers, with some receiving traditional job-based coverage and others pushed out into the individual market. Not only is this a recipe for damaging employee morale and sending workers fleeing to find new jobs, but it opens the door to potential discrimination. It creates a system that allows for picking and choosing who gets quality insurance based on, for example, their geography or pay structure. This would only exacerbate the health care disparities in this country and begs for a workplace crisis when employees realize what is happening. In addition, the possibility that employers could push sicker employees onto exchanges would also make those exchanges more expensive for everyone.

This policy creates a system of haves and have-nots. It leaves workers to fend for themselves to find often-worse health coverage at a higher cost. And it opens the door to workplace discrimination and controversy that no employer should want to touch.

These are among the many reasons that dozens of health care stakeholders, business organizations, and progressive groups urged the Trump administration not to move forward with these proposed rules. And it’s why a range of respected patient advocates and business organizations are supporting President Biden’s efforts to reverse them.

Directed by the President’s executive order on January 28th, the relevant agencies in Washington have already begun a process with the goal of “suspending, revising, or rescinding” these rules. Finishing the job will be critical to protecting the coverage that workers have earned. There’s no question more work needs to be done to create more affordable health care system, but placing this burden on employees is not the solution.

ICHRAs may soon be a thing of the past, which is critical to making sure we’re moving forward with a health care system that respects workers and supports them in times of need. That’s something for which all businesses should fight.


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