ICHRA Helping Employers Create Special Enrollment Period

It’s an all-too-common scenario:  a business during the Open Enrollment season is faced with two options:  renew their traditional group health insurance plan, at an increased rate, or not offer any health benefits.  Because these businesses don’t know what other options are available, they renew at the increased rate to keep providing their employees with health benefits or simply stop offering health benefits. 

Many employers are not aware, but there are other options out there to help save money, by not offering the traditional group health insurance, and still provide their employees with a health benefits package without reducing the value they are used to receiving. 

The Individual Coverage Health Reimbursement Arrangement (ICHRA) is a tax savings plan that allows employers to reimburse employees for their health care costs, offering a more personalized health benefit.  The employers can choose to offer the ICHRA to all employees, or to specific classes, with no contribution caps, to fit any budget. 

Many Business Partners and clients are used to only being able to make changes to their health benefits during Open Enrollment season, but when switching to the ICHRA, at any point in time during the year, creates a Special Enrollment Period (SEP)!  This provides a 60-day period to get things in line and employees to pick the individual coverage plan that fits their lifestyle. 

Casandra Mueller, a BASE® Sales Representative, is trying to educate her Business Partners and clients that there are other options, even after they renewed their traditional group health insurance plan during the open enrollment season.  Recently, she worked with an owner of 3-4 grocery stores that renewed their group health in January but had an increase of 25%! 

“The business owner ended up renewing as they felt like making the decision in January was too tight of a timeframe to explain and get the employees on board with an ICHRA.”  Casandra said.  However, after talking with Casandra, learning that when implementing an ICHRA in their business will trigger a Special Enrollment Period (SEP), this grocery store owner learned that they didn’t have to wait until the NEXT open enrollment season.  This employer saw the potential savings and the value in the ICHRA when it comes to offering this health benefit to his employees.  The employer will be offering the ICHRA in March, which will create a 60-day SEP to allow employees to have time to navigate the marketplace and pick the individual health insurance coverage that best fits their needs.

What is the Special Enrollment Period (SEP)?

  • It is a special timeframe that acts like the annual open enrollment season at any point in the year.
  • The SEP will allow employees to navigate the marketplace and pick a plan that is right for them.
  • It is available regardless of what type of insurance the employee currently has. They can use the 60 days to switch. 
  • It applies to employees who have been offered a health benefits plan in the past, either during the employer’s annual enrollment period, or when they first became employed.

The increases in group health insurance premiums are happening across the board in all types of businesses.  In Colorado, a Human Resources director of a sandwich business said, “We previously had a large group plan, and when we were going through renewal, we got a 46% increase in premium, which is not sustainable.”

After seeing the large increase, they knew they needed to find another option for the company’s nearly 100 employees.  The business was introduced to the Individual Coverage HRA.  Of course, with all things new, the business was a little hesitant to enroll, but in the end, it proved to be successful!

The business’ employees weren’t forced to be enrolled into a single group plan, and the business helped their employees pay for their health insurance premiums, while saving money.  The employees had the flexibility to shop for an individual health plan with options that work best for them. 

Casandra wants our Business Partners and clients to know that it is not too late to go a different direction, and poses the question to our BPs and clients, “Do you work with a business, know of a business, or are an employer who could benefit from re-evaluating the current health benefit plan?"

No need to wait for Open Enrollment to make a change.  BASE® can help today!  Especially early in the year before the employer and employees have spend a lot of money towards the traditional group health plan.  Please Contact BASE® at 888.386.9680 or visit www.BASEonline.com

How Can an Employee Have BOTH an FSA and an HSA?

Both the Flexible Spending Account (FSA) and Health Savings Account (HSA) are health benefit accounts that are popular because they help employers maximize tax savings and help employees pay for their qualified health care costs.  But many times, we hear the question…

“How can an employee have BOTH an FSA and an HSA?”

The Flexible Spending Account (FSA) is a health benefit that allows employees to set aside money on a pre-tax basis to pay for health care expenses that are not covered by insurance.  FSAs help employees reduce their out-of-pocket health care costs. 

The Health Savings Account (HSA) is a triple tax advantage account that allows employees in a high deductible health plan to save and pay on a pre-tax basis for qualified health care expenses.  HSAs help employees save for the future to build wealth and to diversify their retirement portfolio.  

To answer the question, how can an employee have an FSA and HSA at the same time?  Generally speaking, you cannot have a health FSA and HSA at the same time.  However, there are 2 exceptions:  an employee can have an HSA and a Limited Purpose FSA and the Dependent Care FSA. 

The Limited Purpose FSA (LPFSA) is a health benefit that allows employees enrolled in a Health Savings Account (HSA) to set aside money on a pre-tax basis to pay for strictly dental and vision expenses not covered by insurance.  LPFSAs help employees pay for their eligible dental and vision expenses, while saving their HSA funds for future health care expenses and/or invest and save for the future. 

The Dependent Care FSA or the Dependent Care Assistance Plan (DCAP) is a benefit that allows employees to set aside money on a pre-tax basis to pay for the care of a qualifying dependent.  Since these funds are transferred from the employee’s wages on a pre-tax basis, employees can increase their take-home pay.

An employer may not be able to offer their employees BOTH the HSA and health FSA, but there are other FSA options available to maximize tax savings and to help their employees pay for other common out-of-pocket expenses on a pre-tax basis to increase take-home pay.  Please Contact BASE® at 888.386.9680 or visit www.BASEonline.com to see what options available.