ICHRA & QSEHRA: Breaking down the HRA Council’s growth trend report

HRA account rules help to attract more employers and retain them

According to the HRA Council’s Growth Trends: ICHRA & QSEHRA report for 2023-2024, ICHRAs are showing steady growth, especially among large employers—defined as those with more than 50 full-time employees. This solution also allows employers previously shut out of the health insurance market to participate and provide employee benefits, and employers often stick with these HRAs once they try them. 

Near the end of the report, the HRA Council concludes that both ICHRA & QSEHRA are a national “success story” for today’s employers across company sizes, including in more distributed workforces. Here’s a quick overview of the ICHRA account rules and benefits, followed by the statistics that support the HRA Council’s conclusion. 

Overview of ICHRA

As a succinct answer to the question of “What is ICHRA?”, this is a health reimbursement arrangement (HRA) in which employers of all sizes can reimburse employees for some to all of the individual health insurance policy premiums that they pay. 

Employers benefit from ICHRA account rules that allow them to maintain greater control over their healthcare costs, reduce their administrative burdens, and provide tax-deductible reimbursements. ICHRA also allows them to stay in compliance with the Affordable Care Act (ACA). Employees, meanwhile, can benefit by being able to choose the health insurance plan that best fits their requirements and budget. 

Regarding how HRA works, these accounts can cover medical costs ranging from co-pays and deductibles to prescriptions, over-the-counter medical supplies, and so forth. All ICHRAs are a type of HRAs. All HRAs, however, are not ICHRAs. Other types include the QSEHRA, EBHRA, and integrated HRAs. Now, let’s return to the HRA Council report.

Statistic #1: Adoption rates across company sizes

As this tax-advantaged solution of ICHRA entered its fifth year as an employer-sponsored insurance option, it demonstrated an adoption rate increase of 29% between 2023 and 2024. Businesses with at least 50 employees (referred to as “applicable large employers” or “ALEs” under the ACA) served as the insurance product’s biggest growth sector, increasing by a whopping 84% adoption-wise.

Clearly, ICHRAs are gaining popularity. From the employer’s perspective, offering employees the flexibility to select the healthcare plan that best suits them is proving to be an attractive alternative to traditional one-size-fits-all group plans. 

As far as employee levels of satisfaction with healthcare plans, 75% of employees, BenefitPro notes, are satisfied with their employer-sponsored plans. However, when looking specifically at employees who left a previous job, healthcare benefit dissatisfaction was a key factor.  In fact, in 2022, 43% of people who left their jobs, Pew Research Center tells us, did so because of poor benefits, which includes their healthcare coverage. Each year, if their employer changes healthcare plans, they’ll have to wonder what it covers and whether that fits their needs. Employees concerned with the question of “What does HRA cover?”can proceed confidently, knowing that an ICHRA provides reimbursements for the healthcare plan they personally select on the individual insurance market.

Statistic #2: ICHRAs get more people covered

The HRA Council shares how ICHRA and QSEHRA have provided a net gain for healthcare coverage. Of the employers surveyed, 83% had previously been unable to provide health insurance to their employees. In other words, thanks to these HRA plans, employers who had been shut out of the traditional process—something most common with small business employers—can now participate and offer desirable benefits to their employees. 

Statistic #3: Stickiness with startups highlights satisfaction with ICHRA

The HRA Council report aptly notes that when people love their health insurance, they keep it — and when they don’t, startups and small businesses tend to churn in and out of benefit plans, trying to find a good solution to satisfy and keep their employees. In other words, these businesses try one route; the next year, they go another route, and so forth. 

When startups and very small businesses choose ICHRA or QSEHRA, more than four out of five stick with their HRA plan. This provides consistency and freedom of choice.

When healthcare plan choices are sustained, this indicates that both employers and employees are satisfied, and ICHRA account rules allow that to happen. Another positive impact is that healthcare carriers gain insights into what people want and need when coverage continuity occurs, making ICHRA a win-win-win situation.

Statistic #4: Large company adoption means more covered employees

As the number of large companies offering ICHRA continues to increase, the number of people with coverage naturally increases. The HRA Council notes that they have verified more than 200,000, but this doesn’t account for dependents covered by these plans.  

Statistic #5: ICHRA/QSEHRA bring younger demographics into the market

As younger people are added to the overall coverage pool, systemic risk stabilizes, and costs are lowered. The HRA Council reports that nearly 10% of 2024 ICHRA/QSEHRA enrollees were between the ages of 18 and 25, with more than 25% of enrollees in the 26- —to 34-year-old age range.

Statistic #6: What does ICHRA cover? Additional insights into choices

At a high level, the answer to the question of “what does HRA cover?” includes a broad range of medical-related expenses. More specifically, the HRA Council report shares statistics describing plan choices made by employees in connection with ICHRA benefits. The breakdown is as follows:

• Platinum ACA plans: 3%

• Gold ACA plans: 35%

• Silver ACA plans: 25%

• Bronze ACA plans: 34%

• Medicare: more than 2%

• Catastrophic: less than 1%

As this overview of statistics shows, ICHRA account rules allow employees to choose from a broad range of healthcare coverage options. 

ICHRA onboarding demonstration

Gain valuable insights into ICHRA benefits and find out how Thatch provides companies like yours with a way to offer employees customized, streamlined healthcare benefits — to ensure they get the coverage they need while saving you money.