DSP Insurance Insights

ICHRA: What Is It?

An Individual Coverage Health Reimbursement Arrangement differs from a traditional group health plan by shifting how coverage is provided. Instead of sponsoring a group policy, the employer offers a defined contribution that employees use to purchase their own individual health insurance. Working with a plan administrator, employees can choose from multiple insurers and plan options, and their share of the premium is typically paid pre-tax through payroll. For some employers, this approach can be more cost-effective and predictable than maintaining a group plan.

Overview of the New Requirement

Illinois House Bill 1697 introduces a new annual fee tied to prescription drug benefits, and many employers will begin seeing this charge in 2026. Most Blue Cross Blue Shield of Illinois (BCBS of IL) health plans use BCBS of IL’s subsidiary, Prime Therapeutics, as its pharmacy benefit manager (PBM), and this update applies directly to those plans. Under the Prescription Drug Affordability Act, PBMs are required to pay the State of Illinois fifteen dollars per covered individual who is enrolled in pharmacy benefits and lives in Illinois. This includes both employees and dependents. BCBS of IL & Prime Therapeutics will pay the fee to the state fund, and BCBS of IL will pass the cost through to employer groups that fall under the law.

The IRS has announced new inflation-adjusted limits for flexible spending accounts (FSAs) beginning in 2026, giving employees more room to set aside pre-tax dollars for medical and dependent care expenses. These updates, along with a major legislative change from the One Big Beautiful Bill (OBBB) Act, make 2026 an important year for benefit planning. For employees, these changes translate to greater flexibility and potential tax savings. For employers, they mean updated plan limits, new communication needs, and an opportunity to highlight valuable benefits.

What Is Individual Disability Insurance?

Disability insurance pays a portion of your income if you cannot work due to an illness or injury. Employer-sponsored plans often have limits on benefits and an “Individual Disability Insurance” (IDI) policy can provide a more comprehensive level of income protection on their own or layered with an employer policy. IDI policies are:

• Owned by you and stay with you no matter where you work.

• Fills in the benefit gap an employer plan may have.

• Typically provides additional benefit enhancements for catastrophic illness/injury.

On May 22, 2025, the U.S. House of Representatives narrowly passed the “One Big Beautiful Bill Act” (H.R. 1). The “One Big Beautiful Bill Act” aims to promote economic growth, simplify the tax code, and give individuals greater control over their financial and healthcare decisions.

Introduction to ICHRAs

Introducing Level Funding:

What’s it about?

In the ever-evolving landscape of healthcare, organizations are continually seeking innovative strategies to enhance quality, reduce costs, and improve patient outcomes. Two key approaches gaining momentum are the establishment of high-performing networks and direct contracting. These models are reshaping the way healthcare is delivered, ensuring that patients receive the best possible care while keeping costs in check.

When it comes to managing healthcare expenses and securing your financial future, it’s essential to explore your options beyond traditional insurance plans. Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) offer innovative ways to navigate the complex world of healthcare costs while enjoying some significant tax advantages. Let’s break down these options and help you make informed decisions for your financial well-being.