As benefit costs continue to escalate, many employers are searching for ways to gain more control over their expenses. One solution they may consider is using an alternative funding arrangement for their employee benefits.
Alternative funding arrangements can offer flexibility in plan design and opportunities for long-term cost savings. Unlike a fully insured health plan, in which an employer pays a fixed premium to an insurance company, alternative arrangements may involve reimbursing employees for health insurance costs or working with other employers to manage risk.
With appropriate management, alternative funding arrangements can give businesses greater control over their health insurance costs. This article will examine two alternative funding models: captives and Individual Coverage Health Reimbursement Arrangements (ICHRAs).
What is a captive?
Captives are insurance companies owned by the insured. They allow businesses or groups of businesses to manage their own risk. With the right measures in place, being in a captive can help employers control costs and mitigate risk.
As part of a captive, employers save money on the fees normally charged by insurance companies. They can also use data to drive strategy and customize health plans around the needs of their workforce.
The key to making the most of a captive is working with a trusted benefits consultant. Our team works with members of the URA Captive to identify potential health concerns and deliver innovative solutions centered around high-quality, cost-effective care.
Through the URA Captive, employers can benefit from more stable insurance costs and greater buying power. Our unique model brings together employers who embrace innovation and are open to exploring new strategies to address rising health insurance costs.
What is an ICHRA?
An ICHRA is a health benefit that allows employers to make pre-tax contributions to their employees for health insurance premiums and qualified medical expenses. The program was introduced in 2020 and has been steadily gaining traction among employers. ICHRA adoption rose 34% from 2024 to 2025 among employers with 50 or more full-time employees, according to a report by the HRA Council.
Through an ICHRA, an employer defines their annual contribution limits. Employees then choose a qualified individual health insurance or Medicare policy and are reimbursed by their employer based on the amount established by the plan.
ICHRAs can be an effective solution for employers of any size looking to stabilize the cost of their medical benefits. They also benefit employees by allowing them to select a plan based on their personal needs. With ICHRA, a plan can remain with an employee even if they leave their job.
While ICHRAs offer advantages for employers and employees alike, they represent a significant change in how employees access their benefits. As benefits consultants, we understand the difficulties employers face when introducing new ideas to their workforce. Education is crucial to making this model work effectively.
Our ezICHRA team helps employers of all sizes build fully compliant plans that fit their unique culture and needs. Administration can be one of the biggest hurdles to implementing an ICHRA. Many models require employees to demonstrate they have sufficient coverage and request reimbursement after they obtain insurance.
Without the proper processes in place, it can be difficult to keep track of these steps. Fortunately, ezICHRA’s Premium Payment Manager simplifies the process by allowing employees to pay their monthly premiums and request reimbursement.
Through ezICHRA, employees also receive access to a portal containing useful information for choosing a plan, such as the monthly premiums of insurance options available in their area.
There is no one-size-fits-all for employee benefits. Let us explore a benefits strategy that fits your company and financial goals.
