Is Health Insurance Reimbursement a Viable Health Benefits Strategy?

In this episode of Better Benefits, Kyle Estep joined us to talk about individual coverage health reimbursement arrangements (ICHRAs) and their viability as a health benefits strategy for employers. Kyle is the Head of Growth and Business Development at Take Command Health, a Dallas-based company on a mission to accelerate the adoption of the health insurance reimbursement model. Previously, Kyle spent five years building out insurance operations and sales in the Texas market with Oscar Health.

Kyle’s journey to the healthcare industry

Kyle started his career in consulting and got an MBA around the time the Affordable Care Act (ACA) was introduced. The ACA changed the game in healthcare, and when he went back to consulting he was involved with some really interesting insurance projects. He was looking to do more healthcare-related work when he heard about Oscar Health. He joined their team in Texas and had a lot of fun building the business, launching new insurance products, and growing the team. 

Then along came new legislation during the tail end of the Obama administration that said small businesses could reimburse employees for health plans tax-free. This was a game changer. The Trump administration went on to widen these rules, paving the way for more widespread adoption of health reimbursement arrangements. This was a eureka moment for Kyle, and he joined Take Command Health to be able to build out this new product.

What is an individual coverage health reimbursement arrangement (ICHRA)?

ICHRAs are a new alternative to traditional group health insurance. They can be offered instead of group health benefits or in addition to group health benefits. Historically they have been a bit of a hot button topic, with many in the industry debating if they are a great opportunity or flawed alternative to traditional benefits. 

ICHRAs came about in part because employers have long been asking if they can just give their employees money and let them choose their own insurance. That way they can avoid the headaches that come from choosing plans and going through renewal every year. Plus, they have more flexibility if they have employees in multiple states. 

Before the ACA, that wouldn't have worked well for two reasons. One, if employees were healthy they may have been able to get “good” coverage on the individual market, but if they had pre-existing health conditions, they could be out of luck. The ACA introduced consumer protections in the individual market that eliminated this issue. Two, tax law wouldn’t have allowed it. In the past, employers were not allowed to reimburse employees for healthcare. These payments would have been taxed as wages and subject to all regular payroll taxes. But those regulations changed, which allows ICHRAs to have the same tax treatment as a group plan. 

How Take Command Health is bringing ICHRAs to market

Take Command Health offers an end-to-end solution for employers who want to implement an ICHRA. They help employers manage reimbursements and their  software  supports employees as they shop for their own plan.

Take Command offers support for employers, employees, and even brokers. Employers need to make sure they stay compliant as they implement an ICHRA. They also need to choose an amount to reimburse that accomplishes their goals and makes the most of employees’ buying power. The team at Take Command can look at an employer’s current health plan and translate that offering to an ICHRA. It’s all about understanding what an employer’s goals are and how to achieve them.

For employees, choosing their own plan may seem daunting. By regulation, employees must be allowed to pick any local ACA-compliant plan. The Take Command team helps employees make their choice and can even submit applications to some insurance carriers. 

Take Command Health also helps their broker partners understand the ICHRA model and figure out what the whole solution would look like. This is a great solution for brokers to have in their back pocket for clients who might be a good fit. They also have a revenue share arrangement with brokers so they can get paid appropriately for their services.

The impact of COVID-19 on ICHRA adoption

ICHRAs were first broadly available in 2020, so we’ve yet to see meaningful historical data on adoption rates. But we do know that the pandemic introduced a lot of new concerns for employers, especially with healthcare-related issues. It was a time of competing priorities, and it’s certainly possible there was hesitation to change benefits. Take Command Health still doubled in size last year, which was very exciting. The team is looking forward to the market stabilizing and being able to offer ICHRAs to employers who are looking for new options.

What’s next for Take Command Health?

Kyle tells us that Take Command Health is excited to continue to grow in 2021 and beyond.  That will entail a lot of recruiting and hiring to find the best team members. The team is also looking forward to getting back into a physical office. They are excited to build more partnerships with brokers and learn how they can best help them and their clients. The team is also working on a payment solution where employers can pay carriers directly for premiums, so employees don’t have to worry about fronting the money. This would be a big win for employers and employees alike. 

To hear more from Kyle, listen to the full episode:

Kyle’s resources

Kyle’s favorite resource for data related to the healthcare industry is the Kaiser Family Foundation. It is a go-to for all types of research, and it is an invaluable resource for anything related to healthcare in the U.S.

If you want to get in touch with Kyle, visit Take Command Health.

Note, this podcast is for educational and informational purposes only. Any discussion of taxes is for general informational purposes only. Greenhouse Life Insurance Company, its agents and representatives, do not give tax advice. Kyle Estep and Take Command Health are not affiliated, endorsed, or compensated by Greenhouse.

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