Small to midsize employers are uncertain they’ll be able to afford health benefits in the short-term future, shows new findings this week from health insurance marketplace eHealth.
The firm’s research, based on 503 owners and managers of small to midsize business with fewer than 500 employees, found that 89% of those currently sponsoring group health plans are concerned on whether they’ll be able to afford health plan benefits, and eight in 10 describe offering a group health insurance plan as a “burden,” due to costs and administrative tasks. Almost all (93%) of participants to the survey admitted wanting or needing a new health benefit solution to offset costs.
This includes individual coverage health reimbursement arrangements (ICHRA), a strategy that permits employers to contribute to employee health insurance premiums without serving as a sponsor. Employees would instead select a health plan through a private or government system. These health plans, likened to defined contribution (DC) strategies, would offer a monthly allowance to reimburse participants for medical expenses like premiums, deductibles and copays, rather than offer traditional health coverage.
Findings show that enrollment in ICHRA plans has grown in the past years, as employers look to mitigate costs.
“Just as retirement savings shifted from pensions to 401(k)s decades ago, a similar transition is underway for health benefits,” said Fran Soistman, CEO, eHealth, in a statement. “Among small businesses, enrollment in ICHRA plans is up 52% this year, and more employers are looking at how this approach can help their workforce obtain health insurance while better controlling costs and reducing administrative burdens.”
eHealth’s findings report that 75% of respondents believe employers should utilize ICHRA plans rather than offer traditional employer-based group health coverage. Others aren’t aware of the plans, with 66% who say they would contribute to employee-purchased health insurance premiums if “there were a way to do so,” and 54% who remain unfamiliar or uneducated about the plans.
Most employers call for government intervention, especially for smaller plans with tighter budgets and cost restraints. Ninety-two percent of respondents say government officials haven’t paid enough attention to the health benefit challenges that impact small pans, and 82% say they would likely adopt ICHRA plans if tax incentives proposed in the House version of President Donald Trump’s One Big Beautiful Bill became available to them.
This provision would have offered federal tax incentives, like $100 per employee per month in the first year, for smaller businesses who adopted ICHRA plans. However, the provision ultimately did not make it to the final law.
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