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ICHRA & benefits design

Carol is 63. Zoe is 25. They both got $400.

Two strategies for contributions — and when to use which.

Carol is 63. Zoe is 25. Their boss gives them each $400.

Each vessel below represents what a silver plan costs for that person. Older employees have taller vessels to fill.

Five employees are listed youngest to oldest, each with the monthly cost of a silver plan at their age: Zoe at 25 pays $299, Marcus at 35 pays $423, Dana at 45 pays $546, Ray at 55 pays $669, and Carol at 63 pays $768. The bars grow longer with age, and all of them are still empty.

Zoe · 25 $299/mo
Marcus · 35 $423/mo
Dana · 45 $546/mo
Ray · 55 $669/mo
Carol · 63 $768/mo

the tallest vessel on the team

Illustrative. Each bar is one person’s vessel — what a silver plan costs at their age.

Watch the same $400 pour into each one.

Zoe’s vessel overflows. Carol’s barely fills a quarter. Same check from the boss — completely different purchasing power.

The same five vessels, each now filled by an identical $400 contribution. Zoe’s $299 premium is covered in full, Marcus covers 95 percent, Dana 73 percent, Ray 60 percent, and Carol only 52 percent of her $768 premium.

Flat contribution: $400 for everyone

Zoe · 25 $400 of $299

100% covered — and money left over

Marcus · 35 $400 of $423

95% covered

Dana · 45 $400 of $546

73% covered

Ray · 55 $400 of $669

60% covered

Carol · 63 $400 of $768

52% covered

Illustrative. One flat $400 contribution, poured into five different vessels.

Zoe covers almost everything. Carol is worried.

A plan at 63 costs nearly 3× what it costs at 25. The gap isn’t a flaw — it’s how the individual market prices by age.

Zoe and Carol are compared directly: both receive $400, but Zoe’s silver plan costs $299 and Carol’s costs $768, so the same contribution covers all of Zoe’s premium and 52 percent of Carol’s.

Zoe · 25

Silver plan premium
$299/mo
Employer contribution
$400
Share covered
100%

Carol · 63

Silver plan premium
$768/mo
Employer contribution
$400
Share covered
52%
Illustrative. The two ends of the same team, side by side.

There’s another approach: adjust contributions by age.

Each person gets a different dollar amount, calibrated so everyone covers a similar share. Watch the vessels equalize.

The five vessels again, now filled by contributions scaled to each person’s premium: $224 for Zoe, $317 for Marcus, $410 for Dana, $502 for Ray, and $576 for Carol. Every bar is filled to the same 75 percent.

Adjusted contribution: a different number for each age

Zoe · 25 $224 of $299
Marcus · 35 $317 of $423
Dana · 45 $410 of $546
Ray · 55 $502 of $669
Carol · 63 $576 of $768

every vessel now sits at 75% full

Illustrative. Different dollar amounts, the same share of every premium.

Start with flat when you’re small. Shift to adjusted as you grow.

Flat is one number, easy to explain. As your team diversifies in age, adjusting improves retention because nobody feels shortchanged.

Two lists set the strategies against each other for every employee. Under a flat $400 the covered share slides from 100 percent at age 25 down to 52 percent at age 63; under age-adjusted contributions, which range from $224 to $576, every employee covers 75 percent.

Flat: $400 each

Zoe · 25
$400 · 100%
Marcus · 35
$400 · 95%
Dana · 45
$400 · 73%
Ray · 55
$400 · 60%
Carol · 63
$400 · 52%

Adjusted by age

Zoe · 25
$224 · 75%
Marcus · 35
$317 · 75%
Dana · 45
$410 · 75%
Ray · 55
$502 · 75%
Carol · 63
$576 · 75%
Illustrative. The same five people under each strategy.