Deceptive ICHRA Marketing
Highlights Growing Risk of Health Discrimination
December, 7 2023
Keep US Covered has sounded the alarm about the potential harms posed by Individual Coverage Health Reimbursement Arrangements (ICHRAs). This scheme represents a threat to the quality, affordability, and basic fairness of health coverage in the workplace. Recently, a number of companies began heavily marketing these plans on false premises, failing to reveal the truth about how ICHRAs affect workers.
Earlier this month, a Bloomberg Law article cited that the rate of ICHRA plans being used has increased 171% over the last year. The report notes that while companies with fewer than 50 employees dominate the ICHRA market, larger employers with at least 50 full-time employees are beginning to push these plans instead of offering traditional group health insurance plans, at an alarming increase of 144% – at least according to ICHRA-backing organizations. This translates to lower quality benefits and higher costs for American workers.
In an ICHRA system, classes of workers are given a stipend by their employer to find their family’s health coverage on their own. Many who previously relied on their employers to exercise due diligence and provide a list of quality coverage providers must now fend for themselves. Still, brokers are enrolling more and more companies into ICHRA plans with empty promises and a disregard for the welfare of the people pushed into them.
The truth is, ICHRAs weaken the quality and reliability of health coverage, open the door to discrimination in the workplace, and undermine the affordability of the ACA marketplaces. This flawed system for health coverage originated from an executive order signed by former President Donald Trump in 2017, resulting in a new regulation finalized in 2019.
Here’s what companies promoting ICHRAs don’t want you to know:
Workers placed in the ICHRA system will likely end up with weaker coverage at a higher price – and they’ll be left to cough up the difference in the cost of coverage and the employer stipend.
These plans allow employers to divide workers into different “classes,” meaning some employees, such as older or more vulnerable workers, could receive inferior forms of coverage, while potentially higher skilled or healthier workers continue to receive traditional group coverage, creating a clear invitation for health discrimination.
The ability to move high-risk – and more costly to insure – workers into an ICHRA not only leaves them at risk of getting weaker coverage, but it also threatens the stability and affordability of the Affordable Care Act (ACA) marketplaces. The ACA marketplaces were created to strengthen individual health coverage options, not to serve as a place to dump high-risk and costlier workers.
Even President Biden has recognized the threat created by ICHRAs. In one of his first acts as President, Biden issued Executive Order 14009, which sought to review and do away with ICHRA and short-term limited duration plans, also known as junk insurance. Last summer, the President rescinded the junk insurance policy, but failed to act on ICHRAs, leaving the harmful and discriminatory Trump-era ICHRA policy in place today.
With the apparent rapid increase in ICHRA enrollees, it’s time for President Biden to follow through on his commitment to repeal the Trump ICHRA plans. As the former President and presumptive Republican presidential nominee renews his assault on the ACA, we ask President Biden to take meaningful action to protect quality health coverage and improve care for all workers by repealing the Trump-era ICHRAs as soon as possible. With the stroke of a pen, President Biden can ensure hard-working Americans will continue to have access to affordable, high-quality health coverage.
To learn more about KUC and its partners’ work to educate policymakers on ICHRAs, STLDI, and the social determinants of health, visit KeepUSCovered.org or follow the campaign on Twitter and Facebook.