We often discuss some of the more commonly asked questions from business owners and HR professionals who are exploring ICHRA for the first time. But it might also be helpful to address some of the legal, IRS-mandated requirements and guidelines associated with adopting ICHRA, too. Today, we highlight three of the top legal questions employers often ask before embracing ICHRA.
1. What Is the ICHRA Notice Requirement?
Under the federal guidelines for implementing an ICHRA, businesses are required to follow a strict, 90-day notice period prior to kicking off each plan year. This requirement ensures that company employees have at least 90 days before an ICHRA takes effect to explore their eligibility and benefits and to select their individual health plans. You can learn more about ICHRA Notice Requirements here.
Be advised your ICHRA Notice Requirement must include the following:
- A complete outline of terms for the company sponsored ICHRA
- A proper statement of rights allowing participants to waive reimbursements or to opt-out
- An official declaration regarding how the ICHRA will affect any premium tax credits
- Language that requires the employee participant to inform the exchange they choose to browse of relevant information when applying for premium tax credits
- A statement that outlines how the new ICHRA plan differs from other HRA models
- A statement regarding the nature and guidelines for the Special Enrollment Period afforded to employees
- A complete roster of support resources designed to help employees self-determine affordability
- Language that describes ICHRA integration with those who might already have Medicare
- Contact information for third-party administrators or company individuals responsible for fielding staff questions about ICHRA
2. What Legal ICHRA Plan Documents Are Required?
Another common legal question regarding ICHRA involves plan documentation. Because ICHRA falls into the category of an employee health benefit, it’s subject to regulations with the Employee Retirement Income Security Act (ERISA.) Employee benefits plans must always be communicated using official plan documents to employees and their families.
While there aren’t specific penalties outlined for those companies failing to meet the plan documentation guidelines, the IRS may fine entities in instances where employees ask for the plan document and aren’t given one. In addition to an official plan document, companies should also include a summary plan document that “summarizes” in more common language than what the formal plan document outlines. The simplified summary plan documents could result in fines if not supplied within 120 days of your ICHRA creation. For new hires, you should deliver the summary plan document within 90 days.
Some of the legally required and suggested best practices for your ICHRA plan document are:
- Your ICHRA eligibility requirements
- Your claims processes
- Plan administrator and internal company contacts
- Participation effective dates
- Complete descriptions of benefits (included and excluded from reimbursement)
- Payment and ICHRA funding processes
- Federal mandates to which your ICHRA adheres
- HIPAA protections and privacy officers, if applicable
- Processes for amending the ICHRA
- Processes for terminating the ICHRA
3. What Defines Legal ICHRA Eligibility?
There are ICHRA requirements to know about when creating and developing your eligibility requirements for your participating staff. Depending on how your company is officially structured, you might need to provide outlines for ICHRA eligibility regarding each employee type, including:
- Full-time staff
- Part-time staff
- Hourly paid team members
- Salaried team members
- Seasonal or peak season workers
- Employees experiencing a waiting period
- Temporary employees that work via a staffing agency
- Employees who might be covered under a collective bargaining agreement
- Employees in different geographic locations, based on rating areas
- Foreign employees who happen to be working abroad
Remember, you’ll need to share specifics depending on whether your ICHRA intends to cover spouses and dependents, as well. And for those entities planning to offer both ICHRA and the traditional group health plan, the hybrid model is only viable as long as the same employees aren’t being offered both options.
If you still have compliance or legal questions that need answers, let W3LL provide the clarity you need to legally make the right decision about an ICHRA for your company. In addition to setup and compliance, W3LL can also act as a third-party administrator (TPA) in managing your ICHRA reimbursements, supporting your employee participation, and tracking the metrics throughout the plan year. Connect with experts today!
Pete English
With nearly two decades in health insurance, Pete English’s diverse experience makes him uniquely qualified to help health plans and brokers leverage innovative technology in partnership with W3LL. From growing sales staff by 126% over 4 years at a large health plan, to building his own health insurance brokerage firm with over $7.2MM in annualized premium, Pete has done it all.
