Small Business Big World
New episodes every Tuesday discussing the challenges, adventures and fun of being a small business owner. Each week we'll delve into various small business topics, from real-world DEI considerations to selling your business, using video to market your business, unique benefit offerings for your employees and so much more. Curated by the crew at Paper Trails.
Small Business Big World
What is an ICHRA?
Unlock the power of Individual Contribution Health Reimbursement Arrangements (ICRA) and revolutionize your approach to employee benefits! Join us as Ashley McQuade from Venture shares her expertise on how ICRA can transform the way small businesses manage health benefits, offering flexibility and personalization like never before.
This is Small Business Big World, our weekly podcast prepared by the team at Paper Trails. Owning and running a small business is hard. Each week, we'll dive into the challenges, headaches, trends, fun and excitement of running a small business. After all, small businesses are the heartbeat of America and our team is here to keep them beating. Welcome to Small Business Big World, our weekly podcast where we talk about all things small business. Today, my guest is Ashley McQuaid with Venture Icarus. Right, just Venture.
Speaker 2:Venture, adventure and entrepreneur. All right, thank you. Well, thank you for joining us.
Speaker 1:We're going to talk about Icarus, which we'll get into that in just a second. But before we get into that, don't forget, please like follow share rate review on all the podcast platforms. We are there, trust me. If you want to find us, you certainly can. Those ratings and views really help us grow and continue to help you. So if you have any questions about any of the episodes that we have, you can always email us podcast at papertrailscom and we will get back to you or get you in touch with one of our guests if we need to. So all right, ashley, so you?
Speaker 1:know we small business owners. We spend a lot of money on benefits and thinking about benefits and how that all works. You know health insurance, everyone wants it. A lot of people can't afford it.
Speaker 2:You know a lot of people don't have access to it.
Speaker 1:Talk to us about an ICRA. What does that mean? What does it do? What does that look like in terms of you know, an alternate way of providing benefits to your employees?
Speaker 2:Yeah, so ICRA stands for Individual Contribution, health Reimbursement Arrangement, that's that fun little acronym.
Speaker 1:Yeah, it is.
Speaker 2:So ICRA is legislation passed in early 2020. We were actually founded later 2020. But so it's been around for a bit, but really just exploded within the last probably year. So it's been around for a bit, but really just exploded within the last probably year. And so what ICRA allows is, instead of a traditional group plan you think of your normal health insurance that we've all had you have your employer picking one carrier, maybe two plans, maybe three, and trying to fit everybody into those. So it's defining a benefit. With ICRA, your employer is going to define a contribution and it's pre-tax dollars that employees can then go out to the individual market and pick the plan that actually makes the most sense for them. So it's a lot more flexibility, a lot more affordable, and so that's.
Speaker 1:So the ICRA is a little bit of the second generation to a QSEHRA. Is that correct? Because a QSEHRA is for small businesses only. Qsera is less flexible, I would say Okay, so the ICRA is the second generation, right of that, and basically we're improving upon what has kind of worked for those really small groups, right, exactly, are there any limits on the size of a business or type of business that can use this tool, this ICRA?
Speaker 2:Nope, that's what's kind of a selling point is that there is no participation requirements. We have clients, you know, one to two person, startups, your tech companies, all the way up to large hospital systems, thousands of employees. So there is no restriction there.
Speaker 1:So I'm an employer. I can say, hey, I can afford to provide $500 a month to you for your health insurance, but I'm not going to choose it for you. Instead, what we're going to do is say we're going to pay you the $500. You go to the marketplace, you find a plan. What happens if you find a plan that's $425 a month?
Speaker 2:So I can speak to Ventor.
Speaker 2:What we can do is actually roll that into an HRA for employees, which they absolutely love. So if a company is already giving that contribution, those extra dollars can go into the HRA. And they do have those IRS guidelines so it has to be a qualified medical expense. But that's where employees can put their health care dollars towards. Maybe a high prescription they're on If they want to go get a pair of glasses, people that are family planning putting it towards IVF. So it gives them just way more say in their healthcare dollars and employees will be a lot more strategic about how they shop, knowing they have that, because they may pick a lower utilization plan and not go for the gold plan but maximize their HRA dollars. So we really do see that that changes the way that employees shop.
Speaker 1:Yeah, so it's kind of nice. You can use it for premiums or for healthcare expenses, whether I'm assuming that includes co-pays for your doctors and glasses and those kinds of things, right? What about you know? Is this really designed for just medical care? Can people do? We mentioned glasses, so vision dental I assume you could use kind of for the same idea right, they can put that towards that as well.
Speaker 2:So Vision Dental I assume you could use kind of for the same idea, right, they can put that towards that as well.
Speaker 1:What's the and, as with all things program-wise, are there limits on this every year that the employer can contribute pre-tax Like? Is there it's only $5,600 a year the employer can contribute towards this, or is it unlimited right?
Speaker 2:So it's unlimited in that the employer has the option at the end of the year to if the employees don't spend all that money, they can actually get the money back as savings to the company. The employer can decide to allow a portion to roll over or let all of it roll over.
Speaker 1:So it's kind of like a it's a HSA, fsa, hra all rolled into one. It's kind of a universal tool.
Speaker 2:The HRA dollars always stay with the employer. If the employee terminates, it stays with the company. But that is the point, is just the flexibility for the employee.
Speaker 1:So you know we've. I can speak to my team, right, it's been very traditional for the 20 years we've been in business. I go out, I shop it with our agent every year, right, I get really shitty quotes every year. It goes up 12% every year, right, and my employees expect that, right, they I as an employer. I like to say I'm going to give you the best coverage that we can. Right, we always choose silver or gold plans. You know, we give a couple options and I want people on crappy plans. Um, so I think it's always worked for us. But how do you get employees in the mindset of gosh? Now I have to go shop for my own insurance, right, because insurance is really complicated, especially, I was talking to a friend. I was helping a friend who's never had health insurance before go through their benefit. I just started a new job, got their benefit election, going through online open enrollment with them trying to explain to him this is what this means.
Speaker 2:And this is what this means, and this is what this means.
Speaker 1:You know, I've got deductibles and coays and coinsurance and all that kind of stuff, right? How are you getting employees to think that way? Right, so that they understand what they're buying?
Speaker 2:I've been that friend too. I've been the fourth quarter call-in of the who do? I know that works in insurance. Oh, ashley, what's an EPO? So with this it is. It's the knee-jerk change. Like you know, hesitance to change but seeing the flexibility and the savings, we have the tools built in to assist employees. So there's on the platform and that is really, I would say, our differentiator in the market is our technology. So the platform that they're shopping on very intuitive. It's built to help them pick their plan. Like they can put in their doctor, they can put in prescriptions that they're on to identify the networks where those are, or I should say those doctors and prescriptions are a network. We also have live licensed advisors. They're all part of our team US-based Ventura employees, licensed advisors to help them pick their plan.
Speaker 1:So that's really good. I mean, I again I just think about my employee participation, who we're in payroll and HR. So they were. We're a little more versed in this than, say, my father owns a restaurant across the street where his line cooks have no idea.
Speaker 1:Right, like gosh, I want to go to the doctor, pay my 50 bucks and go home, right? So I think you know teaching the employees those kinds of things is really important. Going through these and I'm assuming when you know you're seeing your clients go through this there's a big education push, couple of launches, couple of you know demos and trainings and things like that to really help figure out you know what that is working on. What are you seeing employers contribute? Is it you know? Does it range? Or how are you helping employers determine how much they should be paying?
Speaker 1:I guess is the question that I would ask, Because if I said, well gosh, I'm paying $1,000 a month for my employees today sounds great, I'll just give them $500 and they can go on their way. Well, can they expect to get good coverage for that $500? Or do I need to be putting more in? Or how does that conversation go?
Speaker 2:So with ICRA there's two ways to fund it. There is the flat dollar amount, where you give everyone the same amount and that's it. But we encourage a percentage of a plan, like, say, 75% of a silver plan, because that way you're giving everybody the same purchasing power but they still have the flexibility to say, okay, I want silver, I'm going to pay that 25% my employer doesn't cover. I want gold, I'm going to pay a little bit more out of pocket, maybe I pick a bronze. I never go to the doctor and I'm going to maximize that HRA dollars that we talked about our health wallet. But coming up with that is all part of the proposal process, which is, I mean, we run everybody's kind of average and show the employer hey, this is what your monthly spend would be if you provide everybody that 75% silver, so they're able to fix their monthly spend knowing, no matter what, that's what they're budgeting for everybody. And then anything other than that is either going to be health wallet or payroll deduction.
Speaker 1:So I'm just thinking of the scenarios that I think through when I'm buying insurance or when I'm selecting insurance for our team. What if you know we talked about so say, you quote 75% of a silver average right? Well, we know that health insurance generally is more expensive for an older population right.
Speaker 1:So someone may. Is it going to come down to a point where, gosh, you're 60 years old, I gave you X amount per month, but you can't find a plan that's affordable, right? Does that ever happen? Because, again, we know, for a 25-year-old it's a lot less than it is for a 60-year-old, and I know my employee population tends to be a little bit older and that's why I spend so much on insurance every year which is fine, but just thinking through that scenario. So, which is fine, but just thinking through that scenario.
Speaker 2:So that's why we would encourage the percentage, because a flat dollar amount obviously, like a 27-year-old $500 is going to cover way more of their premium than someone 57, because the rates on the individual market are age-banded and based on where you live. So for that reason the 75% is more equitable, because it's 75% of a silver plan, whether that person's 27 or 57. So no matter what coming out of their paycheck, it's still only that 25%. So it levels the playing field a bit.
Speaker 1:Okay, all right, I guess that's a good idea, so it doesn't have to be consistent among everybody, right?
Speaker 2:You could say- you could kind of age band it right, so you could say gosh, if you're 60, I'm going to give you a little more.
Speaker 1:If you're 25, I'm going to give you a little more.
Speaker 2:I was going to say that kind of goes into the classes that are allowed with ICRA. So there are 11 classes set by the IRS and so they're non-discriminatory, they're totally compliant. But there are ways that you can vary the contribution or even vary like who you're offering the ICRA to. So the most popular, I would say, are full-time, part-time, hourly salary and where the employee based on the employee where they live. So if you had employees in Maine, maybe the rates aren't as competitive as New Hampshire, so you give your employees in Maine a little bit more. Same thing with, maybe, part-timers, who are usually left out of the conversation. Maybe you're giving them a flat $100 as like a recruiting and retaining strategy. Same thing with seasonal or temp Like I was thinking about up here. You've got a large population of seasonal workers that come up here Like this could be really meaningful for that restaurant you know that you were talking about, to be able to offer them benefits and attract people.
Speaker 1:So so do you? Does the employee have to prove coverage to you? Or I mean, if you give them, if you say, hey, I'm going to give you 500 bucks, they have to prove that they did something with that. Is that what the administrator does?
Speaker 2:Yes, so that is um, employees are only eligible for that those dollars if they're purchasing an ICRA. So it's not like, hey, if I'm waiving, I don't still get the 500 bucks which would be cool. But that is part of the benefit of working with the ICRA administrator is that we're making the direct payments on behalf of the employees. So as an owner, we would bill you once a month for everybody's premium, anything you're withholding anything, or you're rather anything they're withholding from paychecks and then we actually make the payments directly to Carrier.
Speaker 1:So that was going to be my next question, right? So if they're, if employee, you say we're going to give you $750 a month. The employee goes and chooses a gold plan you could and it's $1,000 a month you could deduct pre-tax that $250 from the employee and to contribute.
Speaker 2:Is that fair Okay?
Speaker 1:Sounds like a bookkeeping mess.
Speaker 2:And I'm an accountant. That's all our engineers and product Some of our Slack channels. I'm like I don't even know what they're saying, but they're all brilliant, they all handle that.
Speaker 1:No, I can see how it works for sure, and that was going to be. My question is you know, can employees contribute pre-tax to additional premiums or costs, which it sounds like it can, which is really cool, so that's awesome. So what you know? We talked a little bit about the culture of this product and you know, when we were talking earlier you mentioned some states are a little more advantageous than others for this. Or, you know, we're in New England, right? You said New Hampshire might make more sense than someone in Maine. What's that all about?
Speaker 2:Yeah, and I have said that and I'm up front, that there's certain states that are more hospitable to ICRA than others, like Vermont for instance. The rates just aren't as competitive, I would say overall.
Speaker 1:Like on the individual marketplace rates, on the individual market right versus like a group.
Speaker 2:There's also more narrow networks, which I think, as this continues to be really popular, we'll see carriers release plans for the individual market, so those will widen. But for instance, like in New Hampshire, there's no PPOs available on the individual market. So you're an HMO, which a knee jerk for an employee might be. Well, what if I want to go to Boston for treatment? Right, right, right, if it's an emergency, you still can, but you don't have that option on the individual market. You'd be on an HMO. So that's all part of the discussion with the employer, like looking at your employees and being up front and having the conversation about their needs.
Speaker 1:Yeah, and certainly I mean for me again that HMO is always like that's the scary three-letter you know, acronym for me. I never want to make. I never want my employees to be in that kind of program, right you know, hack a name for me. I never want my employees to be in that kind of program, right you know? Our benefits person gives me options every year. I'm like I don't even want to see the year, just save it off, right? Because, again, I've always had a PPO. It's always the most friendly.
Speaker 1:It's always the most flexible and again I want to provide good coverage to my team.
Speaker 2:So that's certainly something to think about.
Speaker 1:And in Maine they are. The PPO is available. You guys have, I think, over 200 plans available up here, which is sounds pretty great, yeah. So what about those season? What are you seeing the seasonal businesses do? So say you're, you know, gosh, I'm a restaurant that's open seasonally, you know, may to October, whatever that's the main season right?
Speaker 1:Are you seeing employers offer ICHRAS for that time period, Say, hey, go out, buy, at least you have coverage for the summer. Or do they work that out so that they get the reimbursement all year? How are people working on that?
Speaker 2:So that would be if the employee is keeping the coverage, all the individual plans they stay the same price. So if an employee leaves, they don't lose their coverage, they would just take over the payments and pay for it directly.
Speaker 1:Okay, so they could keep their insurance year-round, they just so you're just offering the subsidy, so to speak. Sorry, I keep hoping that's okay.
Speaker 2:That might just be so. When I was thinking about it, I was like you might have employees that live in-state and keep the coverage because they're here anyway, Sure. But I was thinking if you have a population that comes here to work, they could have the coverage while they're here, so they have health insurance while they're here and then when they leave they cancel it. So that's another way.
Speaker 1:It's so flexible. I'm sure the insurance companies don't like that.
Speaker 2:No, of course not. But the flexibility is there to do that.
Speaker 1:Right, and again, it's this whole consumer-directed health care trend that we're seeing. We're seeing a lot more of the HSAs seeing, right, we're seeing a lot more of the HSAs, we're seeing a lot more of the FSAs, and the ICRA is kind of a merge of all of those kind of thoughts. Right, it's interesting to me that you can kind of use it like that FSA kind of you know or you know the HSA kind of thing. Where, gosh, I'm going to give my employees $1,000 a month or whatever and they can go spend $500 on their, and $500 they get to go spend on whatever they want, as long as it's qualifying, of course, right.
Speaker 2:And I will say, not every ICRA administrator does that, but Ventura does. Not everyone has that HRA element, so I don't.
Speaker 1:Okay, which is nice, I mean, I think that's a really cool way of doing that. So obviously you need to find an administrator for this, it sounds like, because there's a lot of moving parts. What does that administrator do?
Speaker 2:So that's going to be, I mean, a full service ICRA administrator.
Speaker 2:What we'll do is from proposal like working to figure out the contribution for the company, figuring out their budget, pre-enrollment communications Like you said, the education definitely starts far before the employee's ever shopping.
Speaker 2:Like that all comes ahead of time with you know, group meetings and materials we can share, and then through the actual open enrollment, shopping, getting through on the platform and then post-enrollment it's all that stuff on the back end. So there's making payments to carriers, helping the group get their payroll set up, a lot of compliance pieces with ICRA, things like PCORI fees and plan summary documents. So we manage all of that. And then probably the biggest piece that all ties it together is the customer support throughout the year. So this is really where a group can see kind of taking that administrative lift off of a company, because these are all individual plans you could have employees on six different carriers across 40 plans. They're coming to our team to assist them. So if they have a claim that goes sideways or they need help with a pre authorization, we're supporting them throughout the year as well, not just during open enrollment.
Speaker 1:What about ACA and ACA reporting? Is this ACA compliant right? We know employers with 50 or more FTEs have to be providing insurance. Does this qualify for that?
Speaker 2:It does. That's nice. I know we're talking about small businesses, so I was going to leave them out of it.
Speaker 1:No, that's a real concern. Small businesses are of all size. We see that particularly with our client population. We're very seasonal, heavy we're very hospitality heavy.
Speaker 1:We've tried to help employers get coverage because they're an applicable large employer, because they own two restaurants or whatever, and they can't find plans that are one affordable or two are, you know, are compliant and that they can or that they can reach, they can get enough employees to enroll, to even meet the thresholds to get a plan. So there there's all these hurdles, and again I talk about that hospitality workforce because that's where we've seen it the most. So you can offer this. So I'm just going to again say the offer of coverage. That's what ACA is all about, right? So if you say, hey, I'm a restaurant, I'm going to offer you an ICRA, you take it great, you don't take it Great, but I've offered it to you.
Speaker 2:Right. So it's counting as the compliant. You're meeting the minimums essential coverage. So with ACA there's a two-part fine, there's A and B, so you've got your minimal essential coverage, minimum essential coverage and then it has to be affordable. So that is part of what we do in the proposal process with an ALE is benchmarking affordability. So we say, if you offer, this is your minimum basically to be ACA compliant. There's also other compliance that comes along with ACA, like 1095 filings, those things that we'll also manage.
Speaker 1:So you guys do all that, we do all that. Yeah, oh God, love you from the payroll company.
Speaker 2:Right, we do COBRA notices too we do all that. But that's actually where we're seeing the most growth. So in the last year ICHRA grew about 30% year over year. 84% of that, 30 were actually ALEs, so that's where we're seeing the most growth in business size.
Speaker 1:Yeah, I mean again, I see the hospitality piece being the big piece for us and actually we have a couple of hospitality clients who are doing it, Chris, so it makes perfect sense, Because you can't get a plan for those kind of groups. So being able to have something flexible like this and be compliant is really cool, and you touched on the participation too, which obviously is a huge deal.
Speaker 1:Yeah, and we see that problem with clients and the participation requirements right, All these carriers say you have to have at least 50% of your population on board for us to write this policy. Are there participation requirements for an ICRA? Right, If you have 50 employees and only three participate, is that okay?
Speaker 2:Yeah, that's. Another huge draw of ICRA is that there is no participation requirements, and then personally Ventura. We have no minimums or anything like that. So, like I said, we've got one to two person startups all the way to thousand life groups, multi-thousand life groups. But that is again, yeah, a huge draw of it because even especially with remote workforce now, where they're spread out, trying to fit into a group plan is can be a nightmare.
Speaker 1:So right and trying to find plans that are that work in different states right, I mean, that's again we. I have employees in three states, and even for us that becomes a challenge and you know, because we want to make sure we're in network in certain areas and all that kind of stuff, so that definitely creates some opportunity there for that as well.
Speaker 1:So what are you know if you're talking to the employees, what are the employees saying about this? What are they? Are they coming back and saying, gosh, we really like this. Or are they saying, gosh, no, I really want my employer to do this work for me and select a plan. What are they saying?
Speaker 2:I mean the employees are. It's positive because they're that savings too. So ultimately I mean for them to come back and be like I kind of feel like I got a bit of a raise here. I'm seeing more in my paycheck and the flexibility too. I think like just seeing it now trying to fit a demographic of people into like two plans just seems kind of crazy. Like even the people that you know you want to offer good coverage, like you're talking, but there's still going to be that don't want to spend anything out of pocket. So it's like give them that option rather than forcing them to get a gold plan they're never going to use. Like give them the flexibility to pick up bronze and do something else with those dollars that they'd actually find value in Right.
Speaker 1:Yeah, I mean again my friend that I was talking to. He said you don't need. He wanted the gold PPO plan. I'm like you don't need that. You're 30 years old, you're healthy. Yes, you want to go to the doctors every year. Go for a little bit higher deductible. You can afford to pay that deductible if you need it. But don't pay that out of your check every week because you're never going to use it. Likely Now, if your health situation changes, maybe that's a different conversation. But don't go pay $150 a week for a plan that you don't need.
Speaker 2:Because, because that's the mentality, it's the like, just in case, right. And then it's like you look at the max out of pockets and it's like it's the same, almost the. I won't say it's the same, but it's very similar between, like, the silver and gold, but it's like you're paying that much more for the gold, right, right, that mentality and again, I, as an employer, I have that hard conversation with myself every year.
Speaker 1:Saying conversation with myself every year, saying I want to make sure I'm providing good plans to my employees, I want to make sure that if something happens to them God forbid they need to be in the hospital for a week, that they're not going to come out with a hundred thousand dollar bill and all these issues and whatever, right.
Speaker 1:So I think that's certainly on my you know again I want to be a good employer, I want to be providing that and I think culturally as a society, for a long, long time right 75 years or more we've been saying the employer is the one that needs to provide this. So it's definitely changing to that kind of consumer directed product is a real mindset change for society and business culture. So what else? If you had to tell a small business one thing about a ICHRA or one huge benefit about an ICHRA, what would it be?
Speaker 2:I mean, it's the whole package, it's the savings, it's the flexibility and when you were talking about being an employer and wanting those good plans, that's been something that's really been nice to see. That's not everybody. That's like what's the cheapest. You know what I mean. Employers really the majority that I've saved significant money are reinvesting, like they're increasing their contributions, say from 50 to 70%, so that's been really positive. But yeah, I truly believe it's the health care of the future.
Speaker 1:All right, health care of the future. You're heard here. If people want to get in touch with you, what's the best way? Either you or the company Ventor or whatever social email. What's the best way to get in touch with you?
Speaker 2:Yeah, our website, ventorcom V-E-N-T-E-U-Rcom. We just released, under resources, a statewide it should say state view, and you can go on. You can actually see how many plans are available in each state, the carriers, sample rates. Um, we've had a lot of added, a lot of enhancements to our website. Um, I'm on linkedin ashleymcquade at venturacom there you go awesome.
Speaker 1:Well, you heard here the health care of the future. No, icarus, we're seeing a lot more clients doing this, so it's it's definitely something that is really intriguing, and I think we're going to have a conversation after this about that. So, well, good, all right. Well, thank you for joining us. Don't forget like, follow, share, rate review. We are everywhere you get your podcasts. We're on all the social media networks. Remember, if you have questions for us or can't remember Ashley's email podcast at papertrailscom, we're happy to get you in touch with any of our guests, especially Ashley as well.
Speaker 1:So thanks so much for listening and we'll see you next week. Thanks for listening to this week's episode of Small Business Big World. This podcast is a production of Paper Trails. We are a payroll and HR company based in Kennebunk, maine, and we serve small and mid-sized businesses across New England and the country. If you found at PaperTrailsPayroll across all social media platforms and check us out at PaperTrailscom for more information, as a reminder, the views, opinions and thoughts expressed by the hosts and guests alone. The material presented in this podcast is for general information purposes only and should not be considered legal or financial advice. By inviting this guest to our podcast, papertrails does not imply endorsement of or opposition to any specific individual organization, product or service.
