To meet the diverse needs of the everchanging workforce, we are excited to offer two new group benefit services: the Individual Coverage Health Reimbursement Arrangement (ICHRA) and the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). These resourceful options offer flexibility, cost control, and tax perks that can benefit both your business and your employees. They make a great alternative to traditional health plans for businesses of any size.

“I am seeing a lot of employers really liking the idea of options, like an ICHRA or QSEHRA, that help control their budget while giving their employees more choices and different price points for their health coverage.”  - John Carlson, CEO of Pinnacle

In today's competitive business environment, attracting and retaining top talent is more critical than ever. Providing comprehensive health benefits is a key component of your overall employee value proposition. However, more and more employers are realizing that traditional group health plans are not a good fit for their benefits strategy due to increasing costs.

As a Health Insurance Brokerage Firm, we see firsthand how much health plan premium costs are rising. The average annual single premium and the average annual family premium each increased by 7% over the last year. With these rising costs, employers are looking for other options to replace their traditional group coverage.

What is ICHRA?

The Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers of any size to provide their employees with tax-free reimbursements for individual health insurance premiums and other qualified medical expenses. It was created under regulations issued by the Trump Administration. Unlike traditional group health plans, ICHRA enables employers to offer customized health benefits that cater to the specific needs of their employees.

Benefits of ICHRA:

1. Flexibility: You can tailor reimbursement amounts based on employee classes such as full-time, part-time, seasonal, or those in different geographic locations.

2. Control Costs: Set predictable budgets by defining reimbursement limits.

3. Employee Choice: Employees can choose health insurance plans that best fit their individual needs.

4. Tax Advantages: Contributions are tax-deductible for employers and tax-free for employees.

What is QSEHRA?

The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is for small businesses with fewer than 50 full-time employees. These allow employers to reimburse employees for individual health plan premiums and qualified medical expenses on a tax-free basis. QSEHRA offers a simple, flexible alternative to traditional group health plans.

Benefits of QSEHRA:

1. Simplicity: Easy to administer without the complexities of a group health plan.

2. Cost Control: Employers set a maximum annual contribution limit.

3. Employee Empowerment: Employees can select health plans that meet their personal and family needs.

4. Tax Advantages: Reimbursements are tax-deductible for employers and tax-free for employees.

Why Choose ICHRA or QSEHRA?

Choosing ICHRA or QSEHRA can transform the way you provide health benefits, offering significant advantages over traditional group health plans:

· Customization: Both ICHRA and QSEHRA allow you to customize benefits to align with your company's budget and your employees' needs.

· Attract and Retain Talent: Providing flexible, personalized health benefits can help you attract and retain top talent.

· Regulatory Compliance: Both arrangements comply with current healthcare regulations, providing peace of mind.

What are the differences between ICHRA and QSEHRA?

· Employee Classes: ICHRAs allow employers to create separate allowance amounts based on up to 11 specific employee classes. At the same time, those using a QSEHRA must offer all full-time W-2 employees the same coverage amounts.

· Contribution Limits: ICHRAs have more flexibility with employer contributions since there are no minimum or maximum contribution limits. QSEHRAs, on the other hand, have different max contribution limits for single individuals and family statuses set by the IRS every year.

· Premium Tax Credits: With ICHRAs, Employees who are offered them may or may not be eligible for Premium Tax Credits on coverage through the Marketplace. This is dependent on whether the ICHRA is considered affordable coverage. QSEHRAs are similar if deemed unaffordable; however, if they are deemed affordable, employees who participate in them must reduce the advance premium tax credit by the amount of their QSEHRA.

How to Get Started

Implementing ICHRA or QSEHRA is straightforward, and our team is here to guide you every step of the way. We will help you:

1. Assess Needs: Evaluate your workforce and determine the most suitable option.

2. Plan Design: Customize the plan to fit your company's objectives and budget.

3. Communication: Effectively communicate the benefits and details to your employees.

4. Ongoing Support: Provide continuous support to ensure smooth administration and compliance.

Conclusion

At Pinnacle, we are committed to providing innovative health benefit solutions that meet our clients' evolving needs. ICHRA and QSEHRA are powerful tools that offer flexibility, cost control, and a competitive edge in today's job market. Contact us today to learn more about how these options benefit your business and employees.

By embracing ICHRA and QSEHRA, you can enhance your employee benefits package, control costs, and stay ahead in the competitive landscape. Let's work together to create a healthier, happier workforce.