An Individual Coverage Health Reimbursement Arrangement (ICHRA, “Ick-ra”), sometimes called an individual integrated HRA, is a brand-new employee benefit for 2020. Unlike other HRAs, ICHRA is a game-changer, as it is available to businesses of any size.
If you are not familiar with ICHRA, keep reading for everything you need to know!
An ICHRA is a cool new benefit design that has been available since January 2020. This type of HRA is a great option for employers of all sizes looking to provide their employees’ benefits for the first time or those looking for a better, simpler way to provide benefits. ICHRA is a new, more flexible, and personalized model of employer-sponsored health insurance.
ICHRA, while like a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement), has many improved benefits to the QSEHRA, which was first made available in 2016. With both HRAs, employers reimburse employees for payments towards individual health insurance. However, an ICHRA removes the individual & family dollar limits, offers greater flexibility, and has no employer size constraints, allowing employers to provide insurance in more scenarios.
Within the next five years, it is expected that nearly 800,000 employers will offer Individual Coverage HRAs to pay for insurance for more than 11 million employees.
ICHRA in Simple Terms
Instead of traditional group plans, an ICHRA reimburses employees a set amount for finding and purchasing their own insurance.
1. The employer designs the ICHRA by identifying employee classes and determining the reimbursement amounts for each class. There are no annual contribution caps and flexible class options, so they can make choices based on the best options for both the business and the employees.
2. Next, the employees shop & enroll on W3LL.com for the individual/ family ACA plans that suit their situation the best and submit their proof of purchase for reimbursement.
3. The employer or a third-party HRA Program Manager will reimburse employees for valid claims, including qualified plan premiums and medical expenses.
By choosing an ICHRA, employers eliminate stress for themselves, as well as for their employees. They will not need to worry about having a plan that does not work for their budget or health concerns, and the company will not need to stress over plan administration, participation rates, or renewal issues.
To get started, all that is required is for your business to set up an ICHRA! Once the arrangement is established, employees can begin to receive reimbursements when receiving coverage through a qualified individual health plan. For a plan to be considered “qualified,” it must meet two requirements – having no annual or lifetime limits and covering preventative health services with no cost-sharing.
Here is a summary of the major plan types and how they work with ICHRA:
*Hardship exemption examples
One of the biggest benefits of an ICHRA for an employer is the relatively limited amount of administrative oversight required by the employer. We know that health benefits administration takes a lot of work, especially for smaller companies. Larger organizations typically have entire departments dedicated to it, and for medium-sized organizations, it is typically outsourced to a third-party company.
For smaller organizations, this simplified administration represents a business-changing benefit. You can now offer health benefits to compete with large employers without having to take on the administration of a group plan.
Questions? Check out our ICHRA FAQ page for more information.
Interested in learning more now? Contact our ICHRA specialist, Pete English, at penglish@W3LL.com