A ruling by the US Departments of Health & Human Services and the Treasury in mid-2019 changed the game for small businesses looking to compete with large organizations when hiring high-quality employees. The ICHRA program allows employers to contribute pre-tax dollars for employee health insurance which employees can use to purchase a plan. This affordable avenue toward offering sought-after benefits gives small businesses a real chance at attracting and retaining a talented workforce.
We recently worked with a full-service salon located in Downtown Indianapolis. Pre-pandemic they had a large client base, even working with the Colts Cheerleaders. When COVID hit and the Downtown offices shut down, the salon had to shift. The owners decided to purchase a spa located on the northwest side of Indy. They were able to secure PPP loans for the few employees that stayed on, however once the economy began opening up again, the salon was having a difficult time attracting employees back.
COVID has brought employee health insurance plans front and center in the minds of workers, and many will not lend their talents to a place that does not offer one. For some people, going back to work in itself is a risk, going back without health insurance is more of a risk, and working for an industry that is struggling is an even greater risk. The salon owners knew they had to provide some form of access to health insurance to ensure the longevity of their business.
A traditional group plan was not viable for the salon, so we suggested the ICHRA program. It allows more coverage flexibility for employees, fewer restrictions for employers, wider availability to varying employee classifications, and no limits on contribution or participation levels.
Unlike traditional health insurance plans, ICHRA allowed our client to offer pre-tax funds toward employee health insurance for those who wanted it without having to worry about the percentage of participation. And, they were able to set a budget that worked for them and their employees, rather than have the amount mandated. It was a win/win for both the employer and the employees.
When the ICHRA program was first introduced last year, our Team thought it would create even more complexity in the employee benefits world. However, as we studied the details, we found that it is a viable option for many of our clients. The ruling pushed the insurance brokerage industry out of its comfort zone – and we are one of the few organizations who have taken the challenge head on. ICHRA is now a solid part of our bevy of employee health insurance solutions for our clients.
If you are facing challenges in offering health coverage to your valued employees, reach out to me. The Wharton & Power Insurance Team will review your options and find a fit that works for you and your workforce. Send me an email or give me a call at 317.663.4138.