David Saltzman: 0:00

Is it possible for employers to control their healthcare budget and give employees more choice at the same time? We'll find out on this episode of Shift Shapers.

Announcer: 0:12

Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers Podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry's shift. And now, here's your host, David Saltzman.

David Saltzman: 0:32

And to help us answer that question, we have invited my old friend Chad Schneider, who's head of broker channel at Thatch, to join us. How are you doing?

Chad Schneider: 0:41

I'm doing great. Always good to see you, David.

David Saltzman: 0:43

Uh, it's a pleasure, and thanks for making time to chat with us a little bit. Let's level sec. For for folks who don't know what is an ICRA.

Chad Schneider: 0:52

ICRA. It's a uh, you know, leave it to the government to have a terrible name, but uh an ICRA is the individual contribution health reimbursement arrangement. So it was a uh basically a law that was initially passed back in 2020, end of 2019, officially enacted into 2020, uh in the Trump administration v V1. And uh basically allowed the employers to be able to say, great, let's go ahead and give you some more optionality. If you want to be able to take your current group health plan and be able to basically drop group health coverage and be able to now give your employees a stipend or allowance, and they can basically use that money for uh obviously it has to be used for like an insurance plan, medical insurance plan first, but you know, cap costs, give the ability to be able to have choice, you know, and then now every employee can get their own health insurance plan. And that was basically the the whole concept of that. So um 2020 was the very first year. I would say realistically, it was slow going the first couple of years. You know, there was a handful of like early adopting administrators and a couple of the brokers out there, but the big first year candidly was probably the last year, 2024, I think was like the big boom, if you will. Um, this year is gonna be absolutely explosive for ICRA and uh it's here to stay, that's for sure. And depending on what goes on in the beltway, uh, there's uh some legislation that's gonna codify it and actually change it from ICRA to choice, which is a much better name for uh all the uh all the marketing out there.

David Saltzman: 2:21

To what do you attribute the big boom last year? What changed?

Chad Schneider: 2:25

Yeah, well, you know, for all of us that have been in the business for for more than uh you know a couple minutes here, employers are just tired of it. Uh, they're just tired of the rat race every single year, knowing that their biggest expenditure next to payroll is going to go up, you know, 10, 15, 20, 30 percent every single year. And uh I think they're just tired of it. So, employers, of course, they care about their employees, they want to be able to offer great benefits, they want to be able to offer a great package, but they just can't, they got to get off the hamster wheel of, you know, what else can we do? And uh, why are we still doing it the exact same way we have been doing it? So I think that's really causing it and and triggering it. Take the take that up against the fact that the carriers are much more uh in line because I think that was the problem in 2020 is if you go to certain markets, there'd be like one carrier that might actually like be in play, where now uh most of the carriers are are actually saying let's actually you know expand coverage, have more policies that are going to be um you know better for the employees on the individual market. And and very quietly over the last, you know, let's say you know, five, six years, the individual market has actually grown so large that uh the risk pool has been like, oh my God, like what happened to this? So I think a lot of the group brokers are so focused on group they actually have forgotten or didn't even realize how big the individual market you know has expanded. So that's all those factors kind of came together in a perfect storm.

David Saltzman: 3:46

Well, you know, a lot of folks walked away from the individual market, or it wasn't top of mind once ACA passed. And you know, they they almost some some brokers, the folks that you and I both know, just kind of wrote that off.

Chad Schneider: 3:56

Right, right. And it's like you've got the individual brokers, the the uh the IFP that are so focused on it, they really don't care about group. And then you've got the group brokers that are so focused on group that they you know, we get on some of the calls and they are like, wait, how does this work? Like, well, what's what's this individual stuff? It is pretty wild in terms of the disparity. So, you know, there's a lot of education out there, but with education, with marketing, with you know, a ton of TPAs like myself out there now, uh, you can't turn around without seeing you know five million ads for something ICRA and ICRA this and ICR that and ICR guides. I mean, there it hits you every single day from every single publication. So now if you aren't looking at it, it's uh it's kind of like voluntary benefits 15 years ago, where like if you weren't talking about VB, you were gonna lose the group to somebody it was. And I remember being on that because I was on the early, you know, uh early uh stage and trail for for that too. So this feels very similar, you know, 15 years later.

David Saltzman: 4:52

So, you know, we've talked a little bit about some of the advantages and we'll delve into that in a little more detail. But especially as an advisor, what are some of the biggest challenges that an advisor and an employer faces, you know, when when they're trying to implement or recommend and implement an ICRA? Um, you know, flexibility, administrative complexity, compliance, employee satisfaction, all those things that advisors have to deal with.

Chad Schneider: 5:16

Yeah, totally. Okay, fair question. The biggest challenge, you know, that we see, and I think is you know industry-wide is how am I gonna do this new thing called change management? Even if the numbers work out, even if I like the cost modeling, and now I have to go to my employees who've been doing uh you know benefits a certain way for so many years, and now I have to explain to them that they're gonna have to buy their own plan. And um, that right there is probably one of the biggest challenges for an employer to be able to wrap their brain around. Um, you know, as my my CEO likes to say, group benefits today is you know, imagine going and telling your employees to go to a foot locker and say, every one of you, go pick your size seven shoe. And that's essentially what you're doing, where it's like, yeah, I need this, I need this, I want this. You know, healthcare is local. So the ability to articulate, explain, educate, change, manage, make sure the employees understand that, like, yes, you are picking a plan yourself. Uh, this is actually how this is gonna work. But even actually, let's take a step back further. Part of what we do is a big differentiator, but also has been the main challenge for the first couple of years of ICRA. If you really pop the hood, the challenge is more fintech. And and when you think about that, today it does take a hundred person group. I've got one bill with one carrier, you know, and all my a hundred employees are under that bill. Well, with Icra, I could have a hundred bills with seven carriers in five states. And now all of a sudden it's like, oh my God, what do I actually do? So the money movement, the fintech, the the the behind the scenes is actually where it's been the most chaotic out there. And so uh that is you know what we specifically are solving for first is like a more, I would say, infrastructure first company. But I think you know, if you talk to most employers out there that have not adopted it yet, they're very nervous about how does that actually work? Is this gonna be, is there a way to do a some group like experience, but also explain to the employees? And you know, I I say this, I know this is a controversial opinion. I think most brokers will agree with me, and most employers will probably disagree or agree. I think it's maybe one of those in the middle, but most employers are like, are my employees gonna actually be able to understand and grasp that you know they now might have 50 to 100 choices and individual plans where they've always had one. Um employees are a lot smarter than I think employers probably take them for. I know that every year at open enrollment is always chaos, and there's a lot of that uh you know, angst and and you know, some of those issues, but employees are a lot smarter. Give them the ability, educate them, give them the tools and resources, they will figure it out. And I actually think they're gonna be more empowered and be like, oh my God, this is actually kind of cool. I get to pick, you know, amongst 80 plans instead of being told this is the one plan that doesn't fit my needs. So um, all those factors I think are the biggest, you know, angst around there. But the money movement, the billing, and making sure, you know, when the employee goes to the doctor's office, do they have coverage? Right. I mean, that's actually like part of the the the the chaos out there is like some of the TPAs. It's like once you enroll, what what happens? Do I get something in the mail? Do I get this card? Where like in the group side, it's like here, here, here's all the emails, employer can't control it, broker has much more control. So um, long answer to a short question, but those are, I would say, the the the heartburn and the trepidation that is out there that basically brokers, TPAs, that's what we're all trying to solve for.

David Saltzman: 8:30

Is there decision support tools? Are there decision support tools built into the interfaces that you guys provide? So, I mean, especially the first year, if I'm an employee and I'm faced with here's a whole menu of stuff, choose what you want, it can be intimidating and confusing because you know, you and I both look at the Kaiser Foundation healthcare literacy response reports every couple of years, and it hasn't changed. Folks just don't understand this, or they convince themselves that they don't understand it. So, what tools are on on the platform to help folks make those decisions?

Chad Schneider: 9:01

Yeah, I mean, I would say that you know, that is part of obviously putting the betting that you have to do, you know, with our platform specifically over here at Thatch, we have you know state-of-the-art decision support. It's actually the the UI is very clean. We want to make it as easy as buying a ticket on Expedia, right? Like it should be that simple. And I think the proof is in the pudding. If you think about you know some of the competitive differentiators out there, the fact that our entire book of business over, you know, I mean, like you know, significant amount of employers in a very short amount of time, 80%, almost 85% of our enrollment is actually completely done without speaking to a human. And so I think that actually shows how good the tech is. And this is not just like 25-year-old tech companies. This is, you know, construction, landscaping, manufacturing, you know, every shape and size in between. So, but yeah, the decision support should give you the ability to be able to say, great, um, what's important to you? How much money over what your employer is giving you are you willing to spend? You know, how budget conscious are you? Cool. What about you know choosing a doctor? You know, I need to make sure Dr. David is in my network because if I don't see Dr. David, I I don't care about any of the plans on there. How do I do that? Um, how do I see some of the SBCs side by side? How can I make sure to be able to uh dig into just any of these you know factors, right? So that is that that should be there. That's what we do. That's you know, with you know, giving you all the different tools and resources to make that really good decision. And most people are saying, okay, great, like I understand, I get it. This is uh this this is reasonable and smart. And then you have the the edge case or the really complex situation where it's like, hey, I've got a lot of different procedures, I've got a lot of uh prescriptions, I really need to talk to somebody. And then you should have the ability to speak to somebody. You know, we do that. We have a whole team of you know licensed uh agents internally that are specifically subject matter experts for the state. So if you have my employee in in Pennsylvania, you're gonna speak to someone that knows the Pennsylvania plans and markets to be able to really help them make that choice. And that's that's even better because now I can actually walk through and show them like, okay, this is the most comprehensive, this is the lowest cost, here's actually what's going on, this is what's gonna happen with these specific areas. And the other piece, which is wild, is uh you get more carriers, right? You know, the the brand name, of course, of like the blues and the UHC are clearly out there because that's what the employees have had. But now all of a sudden, and I'll use perfect example, you know, and I start digging in, I was like, Ambetter, who the heck is that? Or uh, you know, Oscar, who the heck is that? And so now you actually have some of these new carriers that are disrupting, you know, the traditional forces that have some pretty kick-ass benefits. So all of a sudden I now get uh access to some of them as well, which is very, very cool.

David Saltzman: 11:42

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Chad Schneider: 12:57

Yeah, there's quite a few these days, just because um I'll qualify this by saying I have been doing just hundreds and hundreds and hundreds of you know demos and presentations and working with some of the top brokers in the country. And even the most powerful big names, you know, I always start the meeting saying, How many of you in this room have sold in ICRA? And uh, you know, maybe one, maybe two, you know, and and then I always say, on a scale of one to ten, what is your knowledge of ICRA in terms of like, you know, really getting into it? Ten meaning you're an expert, and one meaning you barely even know what the acronym is. And on average, you know, three is about the answer. And that's actually very uh, I love the vulnerability that some of the brokers have. And maybe, maybe it's because I've known them for so long that they're probably more honest with me. But like uh the fact that they are even saying three is is pretty wild. So, with that being said, what are the what are the misconceptions? God, where where do I start, David? It's uh it's is there even individual plans that are worth it? Or, you know, oh, individual plans are way more expensive than than the group insurance, or um, you know, the you can't offer uh a employees are gonna hate the experience, or uh, you know, what's gonna happen from a retention standpoint? Because obviously benefits are you know, the the the big thing we've all been saying for years is attraction and retention. Are you actually gonna get all these different areas? So those are some of the the key ones. And you know, we have to dispel a lot of those myths, obviously. And we have to be able to show the data and show the surveys and show the traction and and all that kind of stuff. But just in answering those questions and even just starting knowing that, okay, these are the ones that are gonna come up. Let's have this get them addressed right from the get-go. And also the big one is you know, servicing. How is that actually gonna work? Um, what do I as the broker do? You know, if if you know the old world, this is what I did, but what do I do now? And this is new world. So um, this is a big change. And I think it's probably as big of a change, maybe not as dramatic, but like if you go back to 2010 when when you know ACA passed, like there was a lot of that same stuff, like what you did in 2005 versus what you do today, man, wildly different, right? So I think this is another one of those time periods where uh it gives a broker the ability to reinvent themselves and be able to actually expand services, do more, have subject matter experts. Some firms have a whole ICRA uh center of excellence with some awesome intelligence there. And then some are like, yeah, we're just kind of getting started. We know this the thing is this thing is a thing, we might as well start diving in. So it is pretty wild out there.

David Saltzman: 15:28

So let's flip the script to the next chapter. How should employers think about plan design, contribution strategies, budget predictability in the context of an ICRA?

Chad Schneider: 15:39

Yeah, totally. So I think it depends on if you, you know, always start with what are you trying to achieve as the employer? And I mean, let's face it, most will probably not admit, but it's like some employers come in and say, I literally want to do the minimum so I can be compliant and I just don't get dinged. Uh, some are saying, no, we really want to like flex and we want to make sure our employees have unbelievably cool benefits, and we want to make sure that we're offering every possible nook and cranium that we can. So starting with the like, what is your actual goal? What are you trying to achieve? What's going on? That's where we can be really creative. And there's a lot of strategic levers. And I think part of what the other thing is, you know, there's 11 classes that you can carve out for an ICRA. So you can do it by like state or part-time, full-time, you know, things of that nature. So the ability to say, okay, what if I were to actually do a carve out? How would this actually change my group renewal? What's the strategy for those employees that are on the ICRA? Gives you a lot more flexibility to be able to say, we can be creative and we can do some of these kind of things. But uh, you start with, you know, what's the budget you have in mind? Uh, what are you spending today? Are you looking to be able to have it plans that are equivalent to what you have? Or are you actually looking to be able to say, no, I want to beef it up because I want my employees to be able to spend X amount of dollars? So you always have to start with a lot of discovery around like what that looks like. But what we actually do, which is pretty cool, is the ability to have this dynamic contribution strategy because sometimes there's just a uh flat dollar amount saying, David, we all get you know $1,000 a month, pick and choose. Well, let's face it. And uh the the example of the the 26-year-old in California is gonna have very different premiums than the 55-year-old in Florida. Like, you know, that that's the obviously giant disparity. So $1,000 doesn't go as far for those two. So we have this dynamic contribution strategy, which allows to be able to say, we're gonna pick a certain benchmark level plan, and then everyone will be able to purchase that level of coverage in their local market. So your premium will be X, mine will be Y, but compliantly it actually grows up to the same strategy. That is something that employers love to be able to see because now you actually have parity. Now you have that new equity thing where um, let's face it, you have to, and you know, you're like as an HR person, you're not gonna go in and be like, you know, cool, everybody's getting worse benefits. Uh, and you know, you have to be able to have a good story at open enrollment and why you made this change. So that type of stuff is is really cool. But then it becomes what are the additional perks? Like, how do I wrap in ancillary and voluntary? Uh, are there additional things that we can offer to the employees that you know maybe I didn't have access to in the past? You know, some of the some of the perks, right? Uh, the mental health, the physical health, you know, GLP ones, all that kind of stuff. So all those factors come into play. And then we can say, great, you know, now that we understand where you're going, what your budget is, what your your your goals as an organization are, now we can put a great package and proposal together.

David Saltzman: 18:31

So we spend an awful lot of time on the program talking about data and analytics. And the question is, you know, what role do those things play in the member experience and driving the success or maybe even the failure of an ICRA program?

Chad Schneider: 18:45

Yeah, totally. Well, because you know, at the end of the day, you're still now dealing with individual plans where, you know, obviously in the self-funding world, you can get claims experience, you can get some of that you know data on the individual plans. You know, you really can't, obviously. And then then there's a whole different level of uh ball of wax there. So from the standpoint of like engagement metrics, you know, satisfaction metrics, enrollment metrics, like you know, again, you know, doing some some survey data, things of that nature, obviously that's where it's going to be able to come into play. Um, the carriers today are very, very behind on the individual side where like they're getting better every single day. And you know, as mentioned, like I would say the Oscars and the M betters are are forcing all the other carriers to be able to kind of beef up what they're looking at. But you know, they will even say, like, we've been building out so much on the group side since ACA passed, you know, APIs and EDIs and all these other things, where on the individual side, it's still pretty nascent, uh, in terms of how I mean, it's like, you know, do you need to faction a uh an application still in 2025? And some carriers might say yes. Uh, some are saying no. Here's a full API that we can be able to work with. So I would say the the more innovative things are can you track an application from submission to issue? That is something that's you know fairly new. Uh, that like I I know I know we are the first one to be able to have like a true enrollment tracker where like when you submit it, it doesn't just go into the the the deep dark mist of I hope I get an ID card in a month and I hope I get coverage. Like now you can, you know, just like a dominance tracker, you can literally see application submitted, application reviewed, application you know issued, here's all your you know, digital ID cards, here's all that kind of stuff. So that's where you know we are today. No doubt it's gonna evolve tremendously over the next couple of years. And I will tell you the the the carriers are into it, um, or at least the the vast majority of them, you know, they are building things out. We are having some fantastic discussions with them just to be able to provide insights on, hey, this is what the employees this is the kind of plan they're looking for. You don't offer that, or hey, you're not even in the state. How can we actually make sure that you get this coverage? Or hey, your networks you know aren't as good. Like, what can we do to actually tie some of those pieces together? So the conversations there are expanding pretty significantly, and that's that's that's where it's going versus where it is today.

David Saltzman: 21:02

Well, and that's that's kind of my last question as we wrap up. If you look ahead, let's say three or five years, geez, we used to be able to ask that if you look ahead 10 years, but now you can't ask that question because who the heck knows, right? That's right.

Chad Schneider: 21:20

Yeah, so um I think that, and and and there's several CEOs of some major carriers that you know think the ICRA is going to be the future of healthcare, and it's only going to be growing more significantly. So I would say look out for more data coming out from you know, not only us, but HRA councils, NABIP. You know, there's there's a lot of data out there, but where's it going? It's going to much more integrated systems, it's going to more transparency, it's going to better plans, it's going to better networks. It's going to be much more like healthcare being localized, um, being able to have an individual plan, even though you live in Florida, but when you're on vacation in uh Texas, being able to actually have in-network coverage versus you know, in-network, out of network, and all you know, those types of things that are going on, uh, additional perks that employees are gonna be able to offer. So now a 10-life group is gonna get some pretty cool perks, you know, versus you only have to be at a 500 life group. I think those are you know also where it's gonna be going. The the integrations, the tech is gonna be uh you know, really fantastic. And frankly, I think just the the innovation around where where how can I make sure that the employees are really getting a much better handle on their actual uh knowledge around healthcare? I mean, this is the equivalent of uh 401k in pension. Um, obviously, I was probably the last like class, uh you know, I'm 44. I was the last class to get like a pension at my old company years ago. Um, the the the new hires don't even know what the hell a pension is, right? And so uh I think this is the exact same way, where now you're gonna have a better handle on like your investment, your risk profile. You know, what am I actually looking at from like growth rates? Like this will be the same thing, another you know, five years, employees will actually be able to say, like, all right, I I am healthier because of this, or I may have these outcomes. I've been able to use these cool pre-nouveau body scans and whatever else that are out there that they'd never had access to before. So I think it actually is going to be pretty innovative and game-changing for the future here.

David Saltzman: 23:15

Chad, if people want to learn more, what's the best way to find out more about what you guys are doing?

Chad Schneider: 23:20

Yeah, uh, please feel free to go to our website, which is you know thatch.com, uh, reach out to me on LinkedIn. I'd love to chat with you, and we could happy happily go through our process, quoting, you know, show you all the cool bells and whistles, and you know, we'd love to be able to engage further.

David Saltzman: 23:36

Chad, thanks for spending some time with us today.

Chad Schneider: 23:38

My pleasure. Always always great to see you, David.

David Saltzman: 23:41

Equally so.

Announcer: 23:42

The Shift Shapers Podcast is a production of Shift Shaper strategies and may not be reproduced or quoted in whole or in part without our express written permission. Copyright 2020, all rights reserved.