What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a health benefit that allows employers to reimburse employees for some or all of their health insurance premiums or other qualified medical expenses. The ICRHA allows employers of any size to reimburse employees for some or all of the premiums the employee pays for health insurance they purchase on their own.
Important Things to Know:
- ICHRAs are available to employers of any size.
- There are no limits on how much an employer can reimburse under an ICHRA.
- An employer can offer both a group health plan and an ICHRA, but they have to be offered to different classes of employees so that no employee has an option to choose between the group plan and the ICHRA.
- Employees must be enrolled in an individual market health plan (or Medicare) to receive the ICHRA benefit.
- If the ICHRA does not cover the full price of an employee’s health plan, the employee must pay the remaining premium amount.
How the ICHRA Works
1. The employer sets a reimbursement amount. This amount can vary if offered to different classes of employees but must be a uniform offering per eligible class. This can either be for the entire year, available on the first day of the new plan year, or throughout the plan year (monthly, quarterly, per pay). Employers decide how much tax-free money they want to offer their employees. The amount can vary based on family tier, employee classes, or age. The employer decides if the ICHRA will cover premiums or premiums with the add-on ability to reimburse 213(d) expenses. If the employer elects to allow 213(d) coverage, the employee must be enrolled in an individual health care plan each month they utilize ICHRA funds for 213(d) expenses.
2. Employees are provided the ICHRA Attestation Form to complete and return to their employer. The employer will keep this document on file, it does not need to be submitted to Ameriflex.
3. Employees get qualifying coverage. To participate in an ICHRA, employees must have a qualifying form of individual coverage that meets the minimum essential coverage (MEC) standards.
4. Employees make healthcare purchases. Employees can either utilize their Ameriflex Debit Mastercard® or pay out of pocket and submit for reimbursement. Depending on the employer’s selection of coverage, eligible expenses can include medical premiums, vision premiums, dental premiums, 213(d) expenses, prescriptions, doctor’s office visits, etc.
5. For out-of-pocket reimbursement: Employees will submit proof of their eligible expenses. Accepted forms of proof include a receipt, explanation of benefits, or itemized receipt. The Ameriflex Claims Team will review the documentation to confirm eligibility.
ICHRA Classes
Employers can establish classes to separate employees into groups by legitimate job-based criteria. ICHRA classes can include:
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Full-time: To satisfy the employer mandate, full-time employees must work at least 30 hours per week, but the exact definition can be set by the employer. |
| Part-time: Depending on the employer’s needs, this can be defined as less than 30 or 40 hours per week. |
| Seasonal: Employees hired on a short-term basis or for a particular season. |
| Collective bargaining agreement: This includes employees who are part of a CBA, which is a written agreement between an employer, employee, and their trade union on employment, pay rate, work hours, etc. |
| Waiting period: New employees can have a waiting period before their benefits start. During this waiting period, an ICHRA can be offered. |
| International employees: This refers to foreign employees working abroad, including non-resident aliens with no US-based income. |
| Same geographical location: Employees in the same insurance rating area, state, or multi-state region. |
| Salaried: Employees who receive a salary as wages. |
| Hourly: Employees who do not receive a salary as wages. |
| Temporary: Employees brought on for specific and temporary needs. |
| Family Tiered: This is based on the number of individuals covered. (For example: employee only, employee and spouse, employee and children.) |
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Age-based: The reimbursement amount is set by the age group of employees, determined by the employer. The oldest age bracket cannot get more than 3x what the youngest age bracket receives. |
A combination of two or more of the above can also be used depending on the number of employees enrolled in each grouping.
For additional ICHRA information please review the ICHRA: The Ultimate Guide.
Related Topics
- What are the ICHRA classes
- Can I use an ICHRA and still get my Premium Tax Credit from the exchange?
- Can business owners participate in the ICHRA?
- Can an employer have their contribution pulled out of an ICHRA account?
- Can the employer pay into the ICHRA contributions on a monthly basis rather than First Day available?
