Will ICHRAs Make Company's HR Professionals Obsolete?

Some human resources professionals may be concerned that shifting to an ICHRA approach will eliminate their positions. Are their fears grounded in reality?

For more than eight decades, employers have either offered employees no medical coverage or sponsored a group medical plan. In the latter, the company contracts with an insurer or administrator to offer one, two, or three medical plans to employees eligible for benefits. The company then created a communications plan to employees and remained a resource to help employees understand the benefits that they chose.

Individual-Coverage Health Reimbursement Arrangements represent a very different approach to benefits. This emerging model expands employee choices and shifts more responsibility to workers to choose the right plan from among a wider range of options. It establishes a direct relationship between the employee and the insurer.

ICHRAs also alter the value proposition that human-resource professionals deliver to their employers. And that idea may strike fear in the minds of HR professionals. Is that fear justified?

As a refresher, an ICHRA is an employer-funded account from which employees can withdraw funds to pay for medical coverage that they purchase in their local nongroup market. It's an alternative to the more traditional employer-sponsored model in which the company selects several options, usually pays a percentage of each plan's premium, and actively manages the enrollment process.

The Employer-Sponsored Model

HR professionals are very involved in managing the employer-sponsored model. Their activities typically include an annual review of plans offered and renewal premiums, often followed by negotiations with the insurer (if the company is an Applicable Large Employer - more than 50 workers - whose claims are factored into the premiums) and changes in plan design to shift more financial responsibility to employees to reduce the premium increase. Then, they set employee payroll deductions for their share of the premium, organize and conduct employee communications during open enrollment, and monitor which employees are lagging in making benefits decisions.

During the year, the HR staff is responsible for explaining all benefits to new employees and assisting workers (and their covered family members) who need help understanding their benefits or advocating with the insurer.

The ICHRA Replacement Factor

ICHRAs eliminate many of these activities:

• The company doesn't try to divine the wishes of employees and choosing the one, two, or three most appropriate plans for a four- or five-generation workforce.
• The company doesn't provide detailed benefits information during open enrollment.
• The company doesn't orient new employees on the sponsored plans or serve as an intermediary between covered employees and the firm's insurer.

These tasks fall under the heading of either thankless or mundane. Imagine the difficulty of choosing two or three plans that provide optimal coverage for a four- or five-generation work force. That's a thankless responsibility. And preparing new open-enrollment materials in the same format and answering the same employee questions day after day can be mundane.

By eliminating many of these tasks, an ICHRA program can free HR professionals to operate one a higher, more strategic plane.

What Do HR Professionals Do to Administer ICHRAs?

Shifting to an ICHRA model doesn't make HR staffers obsolete. They retain important responsibilities. They must:

• Choose an ICHRA partner that can deliver a robust shopping experience for employees and seamless integration for the company. (See last week's ICHRA Insights column for more detail.)
• Calculate the right level of company investment in employee benefits, including medical coverage, to retain and attract talent.
• Determine the value of each employee's ICHRA stipend, with possible variations according to age (or age band) and dependents covered. These two factors - family members covered and each person's age - directly affect premiums in the nongroup market.
• Ensure (if the group is an Applicable Large Employer, with 51 or more employees) that the company's ICHRA value for each employee satisfied the federal affordability standard.
• Deliver an open-enrollment experience that educates employees on this new approach to benefits and supports them during their first real shopping experience for medical coverage.
• Assess employee satisfaction following enrollment and during the year and fine-tuning the program for the following open-enrollment period.

Shifting to an ICHRA model elevates the HR professional's responsibilities from a lot of tasks and some strategy to a more strategic look at the benefits package and who - HR professional or employee - should know how the medical plan works.

Does ICHRA Technology Threaten HR Jobs?

Today's HR professionals are reporting high levels of job burn-out. The Covid-19 pandemic was the catalyst, as HR had to quickly redesign their recruiting (a national market for talent, but also a national market attracting their productive employees), onboarding, and ongoing support of the employee population. Tools like a robust ICHRA platform can reduce that stress if they replace certain low-value activities and allow HR professionals to focus on activities that deliver value to the company and personal satisfaction.

Could the introduction of an ICHRA make the role of a junior benefits administrator obsolete? Perhaps. That role may not deliver sufficient value when technology like a robust ICHRA platform becomes the center of annual enrollment tasks. In that case, the company can eliminate that position, which may more than offset the cost of leasing the ICHRA technology, and invest the savings in its primary business. The worker who loses her job can seek employment with a company that hasn't adopted the ICHRA model and thus needs someone in that role, or enhance her skills to add value in a new world that integrates innovative technology.

Tools often replace mundane and physical tasks performed by humans. Think maintaining paper files, altering numbers in spreadsheets, and digging ditches. What tools don't do is replace thinking tasks - determining which files to keep and how to organize them, determining which numbers to change in the spreadsheet and analyzing the difference on the bottom line, and determining where and how deep to dig the ditch.

The Bottom Line

A robust ICHRA technology platform is nothing more than a tool. Technology doesn't replace human thinking - yet. Technology boosts productivity. It increases efficiency. It helps humans make quicker, better decisions.

ICHRA technology is no different. By assuming many mundane tasks, a robust platform allows HR professionals to operate on a higher, more strategic plane.

#ICHRAinsights #ICHRA #HSAMondayMythbuster #HSAWednesdayWisdom #HSAQuestionOfTheWeek #HealthSavingsAccount #HSA #TaxPerfect #WilliamGStuart #HSAguru #HealthSavingsAcademy

The content of this column is informational only. It is not intended, nor should the reader construe the content, as legal advice. Please consult your personal legal, tax, or financial counsel for information about how this information applies to you or your entity.

ICHRA Insights is published weekly.