An Individual Coverage Health Reimbursement Arrangement (ICHRA) provides the flexibility and control needed for a personalized coverage model. Customize your health coverage offerings by taking the time to design an ICHRA solution that accounts for your company’s unique needs.
As you develop a strategy and plan for how to implement your ICHRA solution, know that you aren’t alone in this process! W3LL can guide your ICHRA design so you can make the best decision for your employees and your company’s bottom line.
Select ICHRA Classes
An ICHRA allows employers to offer different coverage amounts to different employee classes. For example, employees in your main coverage area may stay on the traditional group plan, but remote employees can receive an ICHRA.
Choose from 11 different employee classes that reflect the demographics and needs of your business.
| CLASSES | ||
|---|---|---|
 |
Full-Time | Work at least 30 hours per week. |
|
Part-Time | Work anything less than what is defined as full-time (above). |
| Seasonal | Hired on short-term basis or for a particular season. | |
| CBA | Have a written agreement between employer, employee, and union (collective bargaining agreement). | |
| Waiting Period | Just joined employer – can be up to 90 days. | |
|
Rating Area | Broken up by geographic location. |
| Non-resident aliens | No US-based income; including foreign employees who work abroad. | |
|
Salaried | |
|
Non-Salaried | Hourly workers. |
| Temporary employees of staffing firms | ||
| Combination of two or more classes above based on their needs |
|
Subject to Class Size Minimums if one class is getting a group plan |
|---|
Each class can have different contribution limits or benefits offerings. This allows the flexibility to design an ICHRA that offers part-time or seasonal employees benefits without breaking the bank. Remember, not all classes need to be utilized, just what makes sense for you and your staff.
Restrictions to keep in mind when designing ICHRA classes include:
- Different benefits cannot be offered to two people in the same class.
- Minimum class sizes depend on the overall number of employees and if any groups are being offered a traditional group plan.
Define Contributions Limits
Once the classes are defined, employers get to decide how much they want to offer the different classes each month. For example, full-time employees can be part of a traditional group plan, part-time employees can receive a contribution of $400, and the Rating Area Class can receive a contribution of $600.
Other factors that you can adjust for personalized contribution limits include the employee’s age and number of dependents. This is the part that really allows the employer to control their costs year over year. Gathering statistics regarding your employee breakdown and current insurance plan can help you determine the needs of various employees. Those with multiple dependents will require a higher contribution limit to ensure comprehensive coverage.
Businesses can also decide what employees use ICHRA contributions for, such as health insurance premium costs. Going through and deciding which qualified medical expenses will be eligible for reimbursement provides clarity early in the process.
Depending on what your employees need, you can decide which expenses to reimburse.
Upload an Employee Roster
Employers must track employees and communicate with their ICHRA vendor by adding to their employee roster either one at a time or by uploading a spreadsheet using a specified template. Continually review the roster and confirm the information is accurate, including what class the employee is assigned to and their contribution amount.
Design a system to keep track and easily update the following information:
- Employees’ General Information
- Estimated Household Income
- Employee’s Dependents
- Class Assignments
Review Affordability
Review which of your employees will receive an ‘affordable’ contribution based on their contribution design in the previous steps. Before approving your ICHRA plan and communicating the changes to employees, make sure that the coverage you are offering is Affordable. According to the IRS, if an employee pays 9.61% of their annual household income or less for their insurance, it is deemed Affordable as of 2022.
Affordability is based on estimated household income. This would include a spouse’s income, but employers typically don’t know this information. Consider using the employee’s salary or gross income. An employee’s dependents will also change the affordability calculation and the ICHRA contribution amount.
To meet the ACA Employer Mandate, coverage must be considered ‘affordable’ for 95% of full-time employees and their dependents.
Partnering with an expert will help guide you through this process and ensure that you are getting the most out of your ICHRA. The demand for ICHRA solutions continues to grow, and W3LL is here to help companies with ICHRA setup and management. Connect with us to discuss how our third-party administrative solution can be just the guidance you need to start reaping the ICHRA benefits.
