The implementation of the Affordable Care Act (ACA) has significantly impacted the dynamics of health insurance markets, particularly in the realms of individual and small group coverage. This report aims to delve into the nuances of these dynamics, focusing on the insights derived from Ideon's analysis of the 2024 landscape.

Ideon recently released their 2024 map focused on the cost differences between small group versus individual ACA health insurance premiums. This analysis involved examining data from various sources and applying robust methodologies to derive meaningful insights. You can explore their map more closely here.

Several overarching trends characterize the small group to individual ACA health insurance premium dynamics. Firstly, there has been a slight increase in the number of states deemed conducive to Individual Coverage Health Reimbursement Arrangement (ICHRA) adoption. In 26 states, the 2024 Individual Bronze plan premiums were equal to or less than those of Small Group, marking a two-state increase from the previous year. However, this landscape was impacted by Bright Health's exit from the individual market, affecting 16 states.

Individual premiums across all metal levels have shown a trend towards parity with small group premiums or being less expensive. In 16 states, the 2024 Individual Silver and Gold plan premiums were equal to or less than those of Small Group.

Employer brands such as the Blues, Cigna, UnitedHealthcare, and Aetna, a CVS Health Company, have expanded their footprint in the individual market, covering substantially all counties. 

The expansion of well-known employer brands in the individual market carries implications for both employers and employees. Employees may find comfort and familiarity in transitioning to individual plans offered by their employer, potentially streamlining the transition process and enhancing overall satisfaction.

One of the most intriguing aspects of the small group to individual ACA health insurance premium dynamics lies in the significant cost differences observed across different states. States where the cost disparities between small group and individual plans are most pronounced are particularly compelling for ICHRA implementation, as they offer the potential for substantial cost savings and increased access to affordable healthcare coverage.

Georgia stands out as particularly noteworthy, with individual plan premiums ranging from 12% to 57% less expensive than small group plans, indicating substantial potential for cost savings. Similarly, Ohio follows closely behind, offering cost differentials of 12% to 54%. Moving down the list, Indiana presents significant savings opportunities, with premiums ranging from 14% to 40% less than small-group plans. This, coupled with the state’s tax incentives, makes Indiana very attractive for employers looking for alternatives to group health.

South Carolina, Colorado, and Washington also offer considerable cost savings, with premiums ranging from 8% to 37%, 9% to 34%, and 5% to 30% less than small group plans.

Furthermore, New York and New Hampshire demonstrate noteworthy cost differentials, with premiums ranging from 4% to 28% and 28% less than small group plans, respectively. 

Florida, Virginia, and New Jersey also offer attractive cost savings, with premiums ranging from 5% to 25%, 15% to 24%, and 14% to 20% less than small group plans.

While Missouri and Iowa exhibit comparatively lower cost differentials, ranging from 7% to 14% and 0% to 8% less than small group plans, respectively, they still present opportunities for employers to realize cost savings and enhance affordability for their employees through ICHRA adoption.

Indiana emerges as a particularly compelling state for employers considering the adoption of Individual Coverage Health Reimbursement Arrangements (ICHRA), thanks to the implementation of House Bill 1004.

Effective January 1, 2024, this bill introduces a new tax credit aimed at incentivizing small businesses to offer individual coverage health reimbursement arrangements. Under this initiative, employers gain access to a tax credit of $400 per covered employee in the initial year of ICHRA implementation, subsequently reduced to $200 per covered employee in subsequent years. This tax incentive complements the cost savings found in the Indiana health insurance market between small group and individual plans.

These states present a compelling opportunity for employers seeking to offer competitive and cost-effective healthcare benefits to their employees. By leveraging the cost savings associated with individual plans and the flexibility offered by ICHRA, employers can tailor healthcare benefits to meet the diverse needs of their workforce while maximizing cost efficiencies.

Furthermore, employees in these states stand to benefit from increased choice and affordability in healthcare coverage. The availability of individual plans with competitive premiums, coupled with the potential for employer contributions through an ICHRA, enhances access to quality healthcare while empowering individuals to select plans that align with their preferences and requirements.

The analysis of small group to individual ACA health insurance premium dynamics highlights the evolving landscape of the healthcare market. With premiums aligning and well-known employer brands expanding their presence, the potential for ICHRA adoption and improved access to affordable healthcare is on the rise. However, continued monitoring and analysis are essential to navigate the complexities of this dynamic environment effectively.

Which states show the most favorable cost differences for ICHRA adoption?

States like Georgia, Ohio, Indiana, South Carolina, Colorado, and Washington demonstrate significant cost disparities between small group and individual plans, making them attractive options for ICHRA implementation. These states offer potential cost savings ranging from 5% to 57%, presenting compelling opportunities for employers and employees.

‍What tax incentives exist to encourage ICHRA adoption?

Indiana's House Bill 1004 introduces tax credits to incentivize small businesses to adopt Individual Coverage Health Reimbursement Arrangements. Employers in Indiana can access tax credits of $400 per covered employee in the initial year of ICHRA implementation, with subsequent years offering $200 per covered employee, augmenting the attractiveness of ICHRA adoption.

How can employers leverage cost savings in states with favorable dynamics?

Employers can capitalize on cost savings by offering competitive healthcare benefits through ICHRA in states where individual premiums are significantly lower than small group premiums. This strategy allows them to tailor benefits to their workforce's needs while optimizing cost efficiency.

How does the 2024 landscape compare regarding small group versus individual ACA health insurance premiums?

In 2024, Ideon's analysis reveals a trend where individual premiums across various metal levels are comparable to or less expensive than small group premiums in many states. This trend suggests potential cost savings for employers and individuals considering Individual Coverage Health Reimbursement Arrangements (ICHRA).

‍What ongoing considerations are crucial in navigating the healthcare market's evolving landscape?

To navigate the evolving healthcare market effectively, continuous monitoring and analysis are essential for stakeholders. Regulatory changes, insurer dynamics, and market shifts can impact cost structures, premium dynamics, and the feasibility of healthcare benefit strategies like ICHRA adoption.

Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.

During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.