ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is a health benefit that allows an employer to provide employees with funding to cover the cost of health insurance premiums. Instead of offering a traditional group health insurance plan, an employer provides an allowance–a set monthly amount of money – that can be used to pay for an individual health insurance plan that best fits each employee’s personal needs and preferences.

With ICHRA, an employee can choose from a selection of individual health plans offered by insurance carriers in their specific geographical location. In general, most people have between 3-7 insurance carriers and 50-100 health plans to choose from–which means added flexibility in coverage levels and costs relative to the one-size-fits-all traditional employer plan. Employees can have the option to select a plan that costs more than the monthly employer allowance, and the additional cost will be deducted from employees’ paychecks.

ICHRA allowances can be set according to several factors, including age (which determines the price of the underlying medical plan), family status, and geographical location, among others. Zorro helps to set ICHRA allowances using a smart model based on “buying power” – i.e. giving employees the ability to purchase a medical plan of a certain level while covering a set, a similar share of the cost.

With ICHRA, employees are the owners of their medical plan. This means that they are responsible for paying for the monthly premium cost. Employers partnering with Zorro help their employees by facilitating premium payments using Zoro Pay, Zorro’s smart fintech solution. With Zorro Pay, employers transfer the full premium cost to Zorro, and Zorro assists employees in setting up recurring monthly premium payments with carriers. Zorro then also helps with setting up payroll deductions for employees who choose plans with premium costs that are higher than the monthly allowance.