Level Funded Plans, ICHRAs, And More New Group Health Options Employers Are Considering

The old model of group health insurance, with one fully insured plan and a big annual renewal surprise, is no longer the only option. Employers, especially small and mid sized ones in Texas, are exploring newer models like level funded plans and Individual Coverage HRAs, or ICHRAs, to gain more flexibility and control.

If you feel stuck between too expensive and we cannot drop coverage, this article is for you.

What Is A Level Funded Health Plan

A level funded plan is a hybrid between fully insured and self funded coverage.

• You pay a fixed level monthly amount that includes:
  • Administrative fees
  • Stop loss insurance, which protects you if claims run high
  • A portion set aside to pay claims
• If your group’s claims run better than expected, you may receive a refund of some of the unused claims funding, depending on the program.

Potential advantages:

• More transparency into claims drivers
• Opportunity to share in savings if the group is healthy
• Often more competitive than traditional small group fully insured plans

Potential risks and considerations:

• Not ideal for every group, especially those with very high ongoing claims
• Requires more underwriting and health information than some fully insured plans
• Plan designs and networks vary widely by carrier

What Is An ICHRA Individual Coverage HRA

An Individual Coverage Health Reimbursement Arrangement, or ICHRA, lets employers:

• Give employees a defined contribution, a fixed dollar amount
• Allow employees to use that money to buy their own individual or ACA compliant plan
• Keep coverage in the individual market, but funded with tax advantaged dollars from the employer

Why employers look at ICHRAs:

• You can vary contributions based on employee class within rules.
• You set a budget rather than chasing unpredictable group premiums.
• Can be helpful if your workforce is geographically spread out or hard to group.

Considerations:

• Employees choose and manage their own policies, so they may need guidance.
• Proper compliance and documentation are essential.
• Works best when employees have good ACA plan options in their area.

Other Alternative Group Health Strategies Employers Are Evaluating

1. Narrow networks and high performance networks
   Employers can sometimes reduce premiums by using narrower networks focused on high quality, cost efficient providers.
2. Reference based pricing, RBP
   Some plans peg reimbursements to a percentage of Medicare rates instead of carrier negotiated prices. This can offer savings but can also introduce complexity and balance billing risks if not managed carefully.
3. Carve outs and direct contracts
   Larger groups may carve out:

• Pharmacy benefits
• Certain high cost procedures
• Centers of excellence for specific treatments

1. Supplemental and gap coverage
   Employers may pair a higher deductible core plan with supplemental products:

• Hospital indemnity
• Critical illness
• Accident insurance

These can help employees manage out of pocket costs without dramatically raising employer premiums.

How Do You Decide What Is Right For Your Business

The right solution depends on:

• Size and demographics of your group
• Claims history, if available
• Geographic distribution of employees
• Your benefits philosophy, such as rich benefits versus cost control
• Your tolerance for risk and administrative complexity

A careful review with a knowledgeable advisor can help you compare:

• Traditional fully insured options
• Level funded or partially self funded options
• ICHRAs or other defined contribution strategies

How Insurance Solutions USA Can Help You Explore New Group Options

Insurance Solutions USA helps Texas employers:

• Compare multiple funding models side by side
• Understand pros and cons of level funded plans and ICHRAs
• Evaluate network strength, plan design, and long term sustainability
• Educate employees to avoid confusion during transitions

If you are wondering whether you could do better than your current group plan structure, we can walk you through your choices in plain language.

Want to explore level funded plans, ICHRAs, or other alternatives
Contact us at 817 756 1442 or [email protected].