ICHRAs, local health networks empower employees to access better care

• Key Insight: Learn how employers are shifting from defined-benefit plans to defined-contribution models.
• Supporting Data: Employer healthcare spending projected at $18,500 per employee by 2026 (Mercer).
• Forward Look: Expect growth in ICHRAs and local provider-sponsored plans as alternatives.
  Source: Bullets generated by AI with editorial review

Amid rising costs and confusion about access to care on employer-provided plans, the current healthcare model isn't working for employees, who are seeking better options from their organizational leaders. 

Forty-seven percent of employees cite high costs in their current plans, according to a recent survey from health-tech company Softheon. Another 34% report confusion about what their coverage includes, while 23% are concerned about poor communication between insurers and healthcare providers. 

"The cost in healthcare is skyrocketing out of control across the board and policy changes are creating additional pressure on individuals to get coverage," says Kevin Deutsch, Softheon's Chief Growth Officer. "Leaders are trying to find the answer to all of that and there isn't any singular silver bullet — but there are a couple of resources rising to the surface."

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Historically, employers have taken on the role of providing health insurance directly to their employees, which means selecting an insurance carrier and designing a plan intended to meet the needs of their entire workforce. However, Deutsch says traditional offerings are becoming too restrictive, which can be addressed with more progressive and holistic solutions. 

Changing traditional contributions

One of the most common examples of alternative healthcare plans is an Individual Coverage Health Reimbursement Arrangements (ICHRAs), which replaces defined benefits with defined contributions. Instead of selecting and managing health plans for employees, employers provide a fixed monthly allowance that workers can use to purchase their own coverage on the individual marketplace, granting them better flexibility and comprehensive coverage in the areas they need it most. For leaders, whose healthcare spending is expected to reach $18,500 per employee in 2026, according to a Mercer survey, it also provides more predictable, controllable costs.

"Employees could have the choice in what's going to be best for them," Deutsch says. "They can decide how much health insurance they actually need and use employer contributions towards their health insurance premiums and other qualified expenses."

Keeping healthcare close to home

Some employees could benefit from something more direct. In fact, Softheon's survey found that 74% of adults would likely choose a plan from a local hospital or health system if it cost about the same as other options. In these provider-sponsored plans, the doctors, hospitals and insurance coverage are more better integrated with their existing needs, so patient information is shared more seamlessly and providers can see a more complete picture of the individual's health.

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"Healthcare is local," Deutsch says. "Employees don't necessarily need a broad national network, the benefits that are part of individual plans meet the essential health benefit requirements and they're all based on employees' local providers they feel connected to." 

If employees have easy access to the care they're seeking without the need to rely on expensive specialists or ER visits, healthcare spending will lower for everyone, according to Deutsch. 

Making improvements that work

Employers considering a different approach to healthcare benefits should begin by connecting with trusted brokers or administrators who are well-versed in options such as ICHRAs, Deutsch says. These professionals can guide employers through the process of evaluating whether a solution like an ICHRA or other locally focused coverage options are a good fit for their workforce. The first step is assessing employee demographics to determine what benefits already exist and whether utilization is high and employees are content. With open and transparent communication, the transition can be made seamless.

Read more: ICHRAs offer a new approach to health benefits for employers

"There's a lot of flexibility out there," Deutsch says. "Making a change doesn't have to be a dramatic shift from what they want and need."

Keeping their options open is no longer something employers can take their time with, Deutsch defends. Employees are expecting more out of their benefit offerings and they'll go to whatever lengths necessary to find them. 

"Maybe at one point in our history and evolution it made sense for employers to provide health insurance," Deutsch says. "But we're well beyond that at this point. Everything that we do in our lives is personalized and tailored to our specific needs, why would health care be any exception to that?"