BENEFITS SAVINGS
ICHRA
Individual Coverage Health Reimbursement Arrangement
INTRODUCTION
Through an Individual Coverage Health Reimbursement Arrangement (ICHRA), employees receive tax-free money from their employer, and can make pre-tax payroll contributions to cover individual health insurance premiums. As a formal, IRS-approved benefit, the ICHRA is free of payroll tax for both the business and for the employee.
IMPORTANT: An employee MUST use the ICHRA for qualifying health care expenses and have individual health insurance coverage, like a plan from the Individual Marketplace or their State Exchange under the ACA.
The Government Exchange “Obama Care” web site has a helpful guide for employers. Click here to learn more.
BENEFITS TO EMPLOYER
(#1) COST SAVINGS – EMPLOYER DECIDES HOW MUCH TO REIMBURSE
It’s up to the employer whether they want to cover insurance premiums, qualified medical expenses, or both and how much they want to reimburse the employee.
(#2) EMPLOYEE CHOOSES THEIR OWN PLAN – NO OPEN ENROLLMENT
This allows employees to buy the healthcare services they want – including individual insurance from the health exchange. Employer is not responsible for administering open enrollment.
(#3) FOR ANY BUSINESS SIZE
An ICHRA is available to businesses of all sizes. Businesses can also choose eligibility requirements as well. The ICHRA is the only HRA to allow businesses to make eligibility distinctions and can use 11 different employee classes to do this.
(#4) NO PARTICIPATION MINIMUM
Another plus of the ICHRA It doesn’t come with minimum participation requirements. Unlike traditional group health insurance, there are no minimum participation requirements associated with the ICHRA.