ICHRA Design Rules

Under an ICHRA, employers can offer as much or as little they want to their employees, if the amount is offered fairly to everyone – there are no limits. Additionally, the employer can choose what they would like the ICHRA to reimburse:

Note: Not all medical expenses are eligible for reimbursement through an ICHRA. Read through IRS Publication 502 for clarity on what is and is not eligible. A few examples include:


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Employers also have the power to choose the structure of reimbursements to their employees within each class:

Opt-Out Requirements

All employees must have the option to decline the ICHRA offering at least once a year before the new plan year begins.

If employees choose to opt-out, they give up the ability to claim reimbursements for the year. They may take this route if the ICHRA is unaffordable, and they would prefer to claim premium tax credits (PTC). We explain this further in our ICHRA affordability blog.

Special Enrollment Period (SEP) and ICHRA

Per Centers for Medicare and Medicaid Services (CMS) regulations, for all employees (and their dependents) to participate in an ICHRA, they must have individual health insurance through a qualified health plan (QHP). The Open Enrollment period varies by state but usually runs from November 1st to December 15th, annually. Outside of that time, a qualifying life event (QLE) is necessary to trigger a Special Enrollment Period (SEP) to secure coverage. Examples of QLE’s are marriage, divorce, having a baby, and moving. Offering an ICHRA for your employees also counts as an SEP, giving the employer more time throughout the year to roll this out.

With the SEP, employees have 60 days to buy a plan, allowing the employer to set up an ICHRA year-round.

Note: If any employees have coverage through a spouse’s group plan or are not covered at all, they will not be able to participate in the ICHRA.

For more information about ICHRA, check out our overview page.

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