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You may have heard how ICHRA is the new groundbreaking alternative to traditional health insurance, but what does that mean as an employee? Designed as a one-size-fits-all plan, traditional health plans covered the needs of the entire workforce. However, employers offering such plans faced increasing costs. Between rising costs and the lack of attention to needs of individuals, group plans are a thing of the past.

ICHRA is the alternative health benefit option that gives the individual full control of their health care needs. Leveraging the individual market, employees can pick a plan that works best for them. To learn the difference between group plans and ICHRA, let’s start with the essentials of what you need to know and how it works.


What exactly is ICHRA?

Short for Individual Coverage Health Reimbursement Arrangement, ICHRA is a type of health reimbursement account (HRA). It provides health care coverage to full time employees and part time employees, with specific coverage for each. Unlike the one-size-fits-all group health plans, ICHRA allows for more personalized coverage based on individual needs.

ICHRA vs. Group health plan

For Employees

The standout feature of ICHRA is that it empowers you to choose your own health insurance plan. You are responsible for covering the individual health insurance premium upfront. This flexibility lets you stick with your current provider, select a more budget-friendly plan, or pick one that aligns with your healthcare needs. To note, you’ll have the option to opt out of the ICHRA if you prefer to go with another plan pption.

For Employers

ICHRA gives employers a way to manage healthcare costs more predictably. Rising health insurance costs pose a challenge. Employers must decide if they want to absorb the increased costs or pass them along to the employee. ICHRAs allow businesses to set their spending while potentially saving money in the long term.

How does it work?

Employees will have access to a health reimbursement account where funds will be aside by your employer. These funds are available for reimbursement of health insurance premiums and qualified medical expenses. Your employer will inform you on your allowance amounts and what’s covered prior to you purchasing a plan.

Where can I find a qualified health plan?

The ACA Marketplace is the best place to start your search for a health insurance plan. This is where you’ll find the most affordable and comprehensive plans available. You’ll also have the ability to check if you qualify for a subsidy, such as premium tax credits.

What’s a subsidy?

Subsidies are intended to reduce the total cost of insurance premiums. Eligibility is based on your income level, so not everyone will qualify. During the shopping process, you can verify your eligibility before making your initial binder payment. The advantage of an ICHRA is that it allows you to combine subsidies with your ICHRA funds, further decreasing the premium.

What counts as a qualified medical expense?

The range of expenses eligible for reimbursement under is determined by your employer. These expenses could include doctor visits, lab tests, prescriptions, and other treatments. Be sure to get the full list from your employer first as you’ll only be reimbursed for approved expenses.

How do I get reimbursed?

Each employer has a unique process for ICHRA reimbursements. Generally, you’ll submit receipts for eligible expenses and, upon verification, receive your reimbursement. Be sure to check with your employer to understand their specific policies.

How do I qualify for an ICHRA plan?

Your eligibility for ICHRA is decided by your employer. They’ll set the rules based on your employment class, with different benefits and dollar amounts for each class, based on the employee mandate. This is something your employer will manage and varies with each company. Regardless, you’ll have the choice to opt out of an ICHRA if you feel it doesn’t work for your needs.

The bottom line: flexibility and savings

ICHRA offers you the flexibility to choose a health plan that caters to your specific needs. Whether that’s a focus on certain health issues or fitting into your budget, you have the control over your health care.

Interested in participating in an ICHRA plan?

If ICHRA sounds like a good fit for you, start the conversation with your employer. They might already be considering it, and your interest could be a deciding factor. If they’re new to ICHRA, share this guide and encourage them to explore it further.


W3LL is your trusted resource to help guide you through all you need to know about ICHRA. As an employee looking for way to make the most of your ICHRA funds, to an employer interested in implementing an ICHRA, we have you covered. Our team of experts will walk you and your employer through every step. When you’re ready, we’ll help you see the power of ICHRA.