CBS News
Benefit trend: Employers opt to give workers an allowance for health coverage
Dave Lantz is no stranger to emergency department or doctor bills. With three kids in their teens and early 20s, “when someone gets sick or breaks an arm, all of a sudden you have thousand-dollar medical bills,” Lantz said.
The family’s health plan that he used to get as the assistant director of physical plant at Lycoming College, a small liberal arts school in central Pennsylvania, didn’t start to cover their costs until they had paid $5,600 in medical bills. The Lantzes were on the hook up to that annual threshold. The high-deductible plan wasn’t ideal for the family of five, but it was the only coverage option available to them.
Things are very different now. In mid-2022, the college ditched its group health plan and replaced it with a new type of plan — an individual coverage health reimbursement arrangement, or ICHRA.
Now Lantz gets a set amount from his employer every month that he puts toward a family plan on the individual insurance market. He opted for a zero-deductible plan with a richer level of coverage than the group plan. Though its $790 monthly premium is higher than the $411 he used to pay, he ends up saving money overall by not having to pay down that big deductible. Plus, he now has more control over his health spending.
“It’s nice to have the choice to balance the high deductible versus the higher premium,” Lantz said. Before, “it was tough to budget for that deductible.”
As health insurance costs continue to rise, employers are eyeing this type of health reimbursement arrangement to control their health care spending while still providing a benefit that workers value. Some consumer advocates are concerned the plans could result in skimpier, pricier coverage for certain consumers, especially sicker, older ones.
The plans allow employers to make tax-preferred contributions to employees to use to buy coverage on the individual market. Employers thus limit their financial exposure to rising health care costs. Everybody wins, say backers of the plans, which were established in 2019 as part of a group of proposals the Trump administration said would increase health insurance choice and competition.
“It’s a way to offer coverage to more diverse employee groups than ever before and set a budget that controls costs for the companies,” said Robin Paoli, executive director of the HRA Council, an advocacy group.
Some health insurance specialists say the plans aren’t necessarily a good option for consumers or the individual insurance market. Even though the rules prevent employers from offering this type of coverage to specific workers who may be sicker and more expensive to cover than others, employers with relatively unhealthy workforces may find the arrangements appealing. This, in turn, may drive up premiums in the individual market, according to an analysis by the University of Southern California-Brookings Schaeffer Initiative for Health Policy.
Plans sold on the individual market often have smaller provider networks and higher deductibles than employer-sponsored coverage. Premiums are often higher than for comparable group coverage. Workers, especially lower-wage ones, might be better off financially with premium tax credits and cost-sharing reductions to buy an Affordable Care Act marketplace plan, but using the work-based ICHRA benefit would disqualify them.
“From a worker perspective, the largest impact is that being offered affordable coverage by your employer makes you ineligible for marketplace subsidies,” said Matthew Fiedler, a senior fellow at the Brookings Institution who co-authored the analysis of the rule establishing the plans.
The plans are currently offered to only a tiny slice of workers: an estimated 500,000 of the roughly 165 million people with employer-sponsored coverage, according to the HRA Council. But interest is growing. The number of employers offering ICHRAs and an earlier type of plan, called qualified small-employer HRAs, increased 29% from 2023 to 2024, according to the council. And, although small employers have made up the bulk of adopters to date, larger employers with at least 50 workers are the fastest-growing cohort.
Individual market insurers like Oscar Health and Centene see opportunities to expand their footprint through the plans. Some venture capitalists are touting them as well.
“The [traditional group] health insurance cornerstone from 60 years ago has outlived its usefulness,” said Matt Miller, whose Headwater Ventures has invested in the ICHRA administrator Venteur. “The goal is to ensure people have coverage, detaching it from the employment construct and making it portable.”
Employers can offer this type of health reimbursement arrangement to some classes of employees and group plans to others based on characteristics such as geography, full-time vs. part-time status, or salaried vs. hourly pay.
Lycoming College wasn’t aiming to be on the cutting edge when it made this coverage switch. Faced with a 60% premium increase after some members had high claims, the school, which covers roughly 400 faculty and staff and their family members, needed to look at alternatives, said Kacy Hagan, its associate vice president for human resources and compliance.
In the end, they opted to offer ICHRA coverage to any employee who worked at least 30 hours a week.
In the first year of offering the new benefit, the college saved $1.4 million in health care costs over what they would have spent if they’d stayed with its group plan. Employees saved an average of $1,200 each in premiums.
Gene J. Puskar / AP
“The finance folks really like it,” Hagan said. As for employees, “from a cost standpoint, people tend to be pretty happy with it, and people really like having a choice of plans,” she said. However, there have been issues with the plan’s administration. Some employees’ coverage was dropped and had to be reinstated, she said. Those problems have been largely resolved since they switched plan administrators this year.
This coverage arrangement can be complicated to manage. Instead of a company paying one group health plan premium, dozens of individual health insurers may need to be paid. And employees who’ve never shopped for a plan before need help figuring out what coverage works for them and signing up.
The complexity can be off-putting. This year, a number of companies that have tried this type of health reimbursement arrangement decided they’d rather go back to a group plan, said Tim Hebert, managing partner of Sage Benefit Advisors, based in Fort Collins, Colorado.
“They say, ‘Employees are all over the place in different plans, and they don’t feel like they’re being taken care of,'” Hebert said.
Vendors continue to crop up to help employers like Lycoming College and their workers manage their plans.
“If you just say, ‘Here’s $1,000,’ it’s extremely discombobulating and confusing,” said Jack Hooper, CEO of Take Command Health, which now administers the Lycoming ICHRA.
It’s unclear whether the plans will take off or remain a niche product.
“It’s a big disrupter, like 401(k)s,” said Mark Mixer, board chair of the HRA Council and CEO of HealthOne Alliance in Dalton, Georgia. Still, it’s not for everyone. “It’s simply another tool that employers should consider. When it fits, do it.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
In 2023, more than 12 million BB and pellet guns were bought in the United States. Many have roughly the same weight, markings and finishes as real guns. But these look-alike replica guns aren’t federally required to have any clear indicators that they don’t shoot bullets. In most states they are available for adults to purchase without background checks or restrictions.
Despite not being classified as lethal weapons, having one has gotten people killed.
Just this year, 12 people have been shot and killed by police while in possession of a replica gun. Three of them were under the age of 18. Since 2014, at least 320 people have been shot and killed by police while holding replica guns, according to a Washington Post database and CBS News review of incidents. Nineteen of those victims were minors.
As more of these guns get into peoples’ hands each year, police, lawmakers and activists are struggling to find ways to keep them safe.
“Almost identical to the real deal”
In the U.S., most toy guns are required to have either a brightly colored tip or colors along the body to distinguish them from real guns — like the neon colors on Nerf water guns or the orange nub on the muzzle of a toy pistol. Since 1989, it’s been illegal to “ship, transport, or receive any toy, look-alike, or imitation firearm” without those markings.
However, “traditional b-b, paint-ball, or pellet-firing air guns” aren’t held to that same standard. Due to a loophole in federal law, these types of compressed air guns, shooting small projectiles made of metal, are allowed to look completely realistic without any differentiating marks. Regulators and lawmakers have been saying for years these rules need to change, but the law hasn’t been updated since it was created.
Some manufacturers, like German-based Umarex USA, have taken full advantage of this loophole. The company’s website identifies it as “the world’s largest manufacturer of over-the-counter-firearm replicas” and lists partnerships with well-known gun companies like Beretta, Colt and Glock. Consumer reviews online rave about how realistic these replicas are. One May 2024 Amazon review for Umarex’s Glock 17 Blowback — currently available for as little as $79.99 — reads “Pistol functions well and is almost identical to the real deal.” Though the packaging does include a warning that the gun “may confuse people. … Police and others may think it is a firearm,” it has no obvious markings on the actual gun showing it’s not a lethal firearm.
“Even in your hand it feels very real,” Jim Balthazar, a retired special agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives, told CBS News. “It’s not like it’s plastic where you can pick it up and it’s very light. It’s solid and — it kind of has the comparable weight to a real firearm.”
CBS News met Balthazar at a shooting range where he examined both the Umarex Glock airgun and a real Glock pistol.
“I think it would be superhuman to be able to tell the difference in the midst of an interaction with a suspect, certainly on the street, lighting conditions are not good and so forth … it looks too real.”
That similarity has sometimes proved to be fatal.
Shot for carrying a replica
In 1989, the Supreme Court ruled that law enforcement officers may use deadly force when they reasonably believe “the subject of such force poses an imminent danger of death or serious physical injury to the officer or another person.” That means if police can’t tell whether a gun is a lethal powder gun or a non-lethal BB or pellet gun, they’re legally allowed to use deadly force.
“It presents a dilemma for law enforcement officers because it looks so real that officers are going to have to react as if it’s a real gun,” Balthazar said. “If it’s very close, it’s not something they’re gonna bet their life on and hope that it’s a toy.”
Already this year that’s proven to be true.
On April 26, 17-year-old Brandon Salgado was killed by police in Long Beach, California while he was allegedly committing a home robbery. He was armed with a replica gun.
On May 1, 14-year-old Damian Scott Cadena Haglun brought what looked like a long gun to his middle school in Mount Horeb, Wisconsin and was killed by police outside the building. It was a pellet rifle.
On June 28, 13-year-old Nyah Mway was stopped by police in Utica, New York because they said he fit the description of a robbery suspect. Police said the boy tried to run away and pulled what looked like a handgun out of his pocket. He was shot and killed by police. He had a Umarex Glock BB gun.
In September, Mway’s family filed a notice preserving their right to bring a lawsuit against the involved police officers and the city of Utica. The officers involved are on paid administrative leave according to the police department and are under investigation by the state attorney general.
They’re three of the 19 minors who have been killed by police since 2014 while holding replica guns.
Utica Police Chief Mark Williams says he holds the manufacturers partially responsible for Mway’s death.
“These guns should not be made and manufactured to the exact replica of a real handgun,” Williams told CBS News. “They gotta know that eventually these weapons are going to fall in the hands of young kids.”
Lindsay Nichols, policy director of the Giffords Law Center, agrees that the fault lies in part with manufacturers choosing to make and market look-alike pellet guns, and believes the public needs to be able to hold them accountable.
“They know that these guns can be mistaken for real guns. In fact, it’s an industry standard these days for them to be sold with warnings that say that brandishing this gun can be dangerous because if it’s brandished in public it can be mistaken for a real gun,” Nichols said. “They supply those warnings when they sell these guns. So the industry knows these can be dangerous in this particular way.”
CBS News asked firearm manufacturers including Glock why they partner with pellet and BB gun manufacturers, and how much money they make off licensing those look-alikes. They did not respond to multiple requests for comment.
Manufacturers targeting kids
In the absence of strong federal laws around BB and pellet guns, states have stepped in to try to implement regulations. Twenty-three states and the District of Columbia currently regulate the sale and possession of non-powder guns. Thirteen states – including New York, Wisconsin and California, where the three minors were killed by police this year – have laws against underage children buying or possessing pellet or BB guns without parental supervision.
But even though states are trying to keep realistic replica guns out of kids’ hands, there’s evidence that manufacturers have been marketing directly to them for years. A 2012 publication from the National Shooting Sports Foundation stated, “Youth ambassadors and others should focus on getting newcomers to take a first step into target shooting through any means, whether a BB or pellet gun, paintball gun, or archery bow. The point should be to get newcomers started shooting something, with the natural next step being a move toward actual firearms.”
CBS News asked the NSSF for a comment on the recent shootings by police who mistake pellet and BB guns for the real thing. The response: “We represent firearm manufacturers. BB/pellet guns are not firearms and are not regulated as such. While we do not represent that industry, it is important to note that BB/pellet guns are also not toys and can cause serious physical injury if not used in a responsible manner.”
“They get teenagers interested in BB guns, and that interest grows into an interest and a desire to purchase real guns. This is part of the gun industry’s marketing strategy,” Nichols said. “They know that they need new consumers for their profits, and they know that these guns look like real guns … People will move up to the real guns.”
A patchwork of regulations
Some states have also moved to block the online sale of BB and pellet guns.
CBS News tested how effective these restrictions on online purchases of BB guns are by attempting to buy the Umarex Glock 17 from multiple online marketplaces, including Amazon, Ebay and Facebook Marketplace. On each site, reporters used the addresses of police stations in major cities to determine whether the purchase would be possible.
The team was able to place orders to 41 states on Amazon. When using ZIP codes from restricted jurisdictions, the site wouldn’t allow the gun to be placed in the online shopping cart and a notification popped up alerting users the purchase was not allowed in that state.
Ebay permitted shipping to two additional states – California and Massachusetts. A pop-up notice during check out on all orders reads “item is regulated by Part 121 of the International Traffic in Arms Regulations.” In a statement to CBS News, eBay said: “eBay policies lay out strict guidelines for the sale of BB guns, airsoft, and air rifles or air pistols, including a disclaimer prohibiting shipping of these items to jurisdictions where they are restricted. Users found violating these policies may face consequences up to, and including, a permanent suspension.”
Facebook Marketplace, where users can sell goods directly to buyers, has its own regulations banning the purchase or sale of all “Paintball, airsoft, and BB guns, and their parts and projectiles.” Yet CBS News found numerous listings that appeared to violate that policy, making these guns easily accessible either by pickup or delivery. After CBS News notified Meta of the listings, they were removed, though CBS News continued to find new listings. A spokesperson said that 98.4% of problem listings are caught by its systems before being flagged by users.
As with real firearms, though, once a BB gun is purchased it’s relatively easy to transport across state lines, regardless of local laws.
Attempts at reforms falter
For decades, some lawmakers have been trying to expand these restrictions, hoping to make these BB and pellet guns harder to access and harder to mistake for the real thing.
Democratic New York Rep. Edolphus Towns introduced federal legislation seven times between 1995 and 2007 that would ban or limit the manufacture and sale of toy handguns that had the shape and size of real firearms. None of his bills made it out of committee.
In 2014, California lawmakers pushed legislation requiring all pellet and BB guns sold in the state to be made out of translucent materials, or have entirely neon colored bodies. The National Rifle Association fought back, claiming that because some real guns are now made with colorful materials, police would confuse the real colorful guns with the colorful BB and pellet guns. Other gun advocates said the colors would lead consumers to wrongly believe pellet and BB guns are toys and therefore safe. The measure failed.
Back in 1994, the chair of the U.S. Consumer Product Safety Commission, the group that now oversees the sale and production of BB and pellet guns on a federal level, said she wanted further safeguards for kids. That year, several toy stores announced they would no longer be selling realistic toy guns. In her statement on the move, Chair Ann Brown wrote, “Fatal accidents with guns involving kids are tragic. Real-looking toy guns may be a small part of the problem of violence in our society, but it is the part of the problem we can solve. Today, I challenge the toy industry to stop producing any guns that look like or could be modified to look like real guns. This would be a meaningful contribution to the safety of American children.”
Twenty-five years later, still no changes regarding pellet and BB guns had been made to the code. Then in 2019, Democratic Senators Robert Menendez, Edward Markey and Richard Blumenthal sent a letter to the acting chairman of the CPSC demanding “the CPSC issue regulations to ensure that non-powder guns, including traditional BB guns, look markedly different from real firearms, and imitation and toy guns.” The senators went on to point out that even when these guns do have colorful tips and tags, they are easily tampered with. They requested the CPSC find new, more tamper-proof ways to differentiate these toy and non-powder guns.
The CPSC told CBS News there is “no planned work to update the regulations,” and industry groups estimate that the yearly sales of pellet and BB guns will double by 2030.
“It’s completely unacceptable. … All the people that die in this fashion don’t need to die,” Nichols said. “It’s completely preventable if there are simply safety standards and if the industry can be held accountable in court.”
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