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Individual Coverage Health Reimbursement Arrangement

PRS from iStream is the groundbreaking payment solution that effectively addresses the inherent flaw in ICHRA plan funding protocols.

Individual Coverage Health Reimbursement Arrangement (ICHRA) has rapidly become one of the leading programs in the employee health benefits space in the United States.

With ICHRA, employees can enroll in an individual health plan that meets their personal and specific needs while still being able to take advantage of an employers financial contributions, similar to how group coverage works today. This is great news for employees as they are now provided with a true choice when it comes to selecting health coverage offered through their employer.  

The challenge presents itself when it comes to premium payments.  Under traditional plans, an employer typically would remit the entire premium in advance of the effective date of coverage to a carrier for an employee.  The employer would then through payroll deduction, withhold a portion of the employee’s premium each payroll cycle during the month to collect the individual contributions toward the health premium coverage.  With ICHRA, the protocol states that an employee is eligible to be reimbursed, meaning that the individual employee is initially responsible for 100% of the monthly premium prior to the coverage being effective.

This places a significant, if not impossible financial burden on employees.  For example, if a family premium was $1,000/month under traditional group coverage, the employer would remit the $1,000 premium prior to the first of the following month.  If the employer covers 50% of the premium as a benefit and runs payroll twice per month, the employer would withhold $250 from each check, effectively recouping the employee portion by the end of the month.  

The process then repeats for all of the remaining months of the year.

With ICHRA, the month the switch from traditional occurs, the employee would not only see the $250/check ($500) total withheld from their paychecks, they would also be responsible for paying for the ICHRA monthly premium in advance as well.  Assuming no change in premium, the employee will month 1 have $500 withheld from payroll for the current (last) month of the traditional group coverage but also during the same time need to remit $1,000 to the new carrier.  

Only after paying for the monthly premium in advance, would that employee be eligible to then be reimbursed from their employer for the financial contribution they had committed to.  The end result is a 200% increase in insurance premium payments initially to kick of the ICHRA coverage.  

This is a financial burden that many simply cannot afford.

PRS from iStream effectively removes this financial burden and provides a process for both employers and employees that operates very similarly to the traditional group coverage payments so many have become accustomed to over the years.

Using the iStream Evolution Platform, iStream is able to bridge this financial gap.  

iStream facilitates the premium payment which is funded by the employer, and places it into limited use accounts, accessible by the US Payment System (RTN/DDA) for the purpose of allowing carrier debits to be processed on a monthly basis. The employer then records the employee portion of the payment as a wage advance and then recoups that advance in each payroll cycle during the month.

The cash flow for the employer is identical to the group coverage model where they were paying premiums in advance and the employee experience is congruent as well.  They were used to (in a semi-monthly model for example) of having $250 withheld each pay period for health insurance coverage (assuming again, $1,000 premium where the employer is contributing 50%).  

With this program, they employer is withholding the same $250 each time to recover the “wage advance.”  The same effective process that is able to deliver enhanced results, allowing employees the choice to select the best providers for their individual/family scenarios without a burdensome or perhaps inability to financially move to a model such as ICHRA.