Zach Harris, founder of Benefitbay, shares how ICHRA and individualized benefits are improving today’s job market for small business owners and their employees.
Employees are leaving the workplace in record numbers. The Great Resignation saw 20 million employees resign from April through August. Even more concerning is a survey claiming 1 in 4 workers are considering leaving their job sometime this year.
The Great Resignation and its impact on small businesses
Small businesses are struggling to stem the tide of employee turnover. Most of the workers are leaving to find jobs with greater flexibility. To remain competitive in this shifting job market, a small business needs a benefits package that will attract and retain a distributed workforce.
ICHRA and the Personalized Benefits movement
Part of the solution to The Great Resignation for small businesses involves the personalized benefits movement. Individual Coverage Health Reimbursement Arrangement (ICHRA) took effect in 2020, and thanks to this legislation, small business owners can reimburse their employees’ individualized benefits plans tax-free.
Benefitbay streamlines individualized benefits plans for small businesses
I left work as an insurance broker to launch Benefitbay in 2012 on the heels of the Affordable Care Act (ACA). My goal was to offer a simple technology suite that managed the transition from a group-based benefit plan to a more individualized benefit solution that takes employers and employees through plan modeling, compliance, deployment and enrollment.
We were ahead of our time. Benefitbay was solving the hurdles in deploying individualized benefits before similar platforms ever joined the game.
For example, an early issue we encountered in offering individualized benefits involved paying for premiums. Most, if not all, ICHRA solutions require employees to pay for the plans out of their own pockets before their employers reimburse them. A lot of people don’t have the money to make that payment. Benefitbay’s Advanced Reimbursement Checking (ARC) accounts offer employers a place to deposit a wage advance. Employees use ARC accounts to pay for their premiums, and employers recover the funds through payroll deduction, just like group insurance today.
During those early years, Benefitbay emerged as a streamlined technology suite offering tools to simplify each step of the individualized benefits process. The tools in Benefitbay’s suite include:
- FULCRUM – addressing modeling and compliance
- ARC – addressing premium funding
- SUBSIDY ADVANTAGE – addressing the assurance that available government dollars are working for small business owners and their employees.
Shortly after Benefitbay was off the ground, Health and Human Services prohibited pre-taxing in this type of environment. That was the death knell for a delivery platform like Benefitbay. We shut down in 2016, but when ICHRA legislation passed last year, the phone started ringing. Over and over, people told us, “You built this great solution, and now we need it.”
Personalized benefits plans offer flexibility to a distributed workforce during “The Great Resignation”
Offering flexible benefits is becoming more and more essential when it comes to attracting and retaining employees during today’s shifting job market. In the small business community, there’s now the ability to leverage government subsidies to help offset some of the costs. This change is good for both employees and employers.
Small business owners can now use historic government subsidy amounts to allow for a group-style health enrollment, and the employer gets credit for it. It all feels like employee benefits, even though the government’s doing most of the funding.
Individualized benefits plans offer flexibility, and that’s what employees want. Under this model, employees who leave their employers to find other work or to start their own business can continue with their current coverage. They own the plan and can take it with them exactly as it is. They don’t have to reset their deductibles or go on Cobra. There’s no disruption at all. Employees engage directly with their insurance carriers so they don’t lose any health insurance benefits.
I predict an acceleration of this model over the next 5 to 10 years. As individual plans become more commonplace, they will remove many barriers to job transition. Rather than asking prospective employers about the benefits they offer, employees will say, “I already have my benefits. How can you help pay for them?”
With individual benefits plans, employees working for a small business also have greater flexibility regarding healthcare coverage. The insurance needed by a 22-year-old college graduate is different from what is required by a father of three in his 40s. In this model, Benefitbay tells employers how much money they can offer their employees, but those employees have the freedom to choose the benefits that suit them best.
There are two sides to this coin. With personalized benefits packages, small business owners can offer richer benefits and broader selection to attract employees into their businesses. Their employees will experience greater flexibility in the benefits they can choose and the portability of those benefits.
At Benefitbay, our focus is to bring positive attention to the personalized benefit movement and make it a good experience for everyone involved. We offer support every step of the way — determining how much money to give your employees, how they enroll, how they pay for premiums, and how they’re selecting plans. Benefitbay can streamline individualized benefits for the employees of your small business.
