Quick Guide to ICHRA Substantiation Requirements

Individual Coverage Health Reimbursement Arrangements keep gaining traction among businesses as the most cost-effective way to provide benefits to their employees. With the many benefits associated with the ICHRA model, there are also several requirements to which participating companies must adhere. And part of the ICHRA model requires participating employees to enroll individually in a qualified health insurance plan. To verify those eligibility requirements, companies need to be aware of substantiation metrics. To help you understand yours, as you embark on your company ICHRA journey, we’ve put together a helpful guide outlining just what you need to know.

What Types of Health Insurance Plans Are Allowed with an ICHRA?

It’s important to remember that your employees will have a host of options when it comes to selecting a health insurance plan that integrates with your ICHRA. If your teams, along with their dependents, want to be eligible for reimbursements, they will need to be covered through one of these IRS-approved types of plans.

Any ACA Marketplace Plan Is Fair Game

Any health insurance plans available through the ACA are considered eligible for ICHRA participation. Whether your employees find a plan through a public or private exchange, these federally regulated coverage options will integrate with your ICHRA. As long as these types of plans follow the laws regarding coverage of essential health benefits and don’t have lifetime limits for these services, the plan is fair game.

Medicare Coverages

Should any of your employees qualify for Medicare coverage, they, too, can participate in your company-sponsored ICHRA. Medicare Parts A, B, or C can all integrate and qualify for reimbursements. They are also eligible for premium refunds for all Medicare parts and Medigap policies.

Some Student Health Insurance Policies Qualify

Some businesses employ students who also qualify for certain student health insurance policies. If you have students who enroll in student health policies that strictly follow the ACA’s requirements for essential health coverage, they can integrate into your company ICHRA. It’s additionally important to point out, however, that not all student plans are created equal, and some are exempt from ACA rules, including those plans that are considered self-insured. Those plans would not qualify for ICHRA participation.

What Types of Health Insurance Plans Do Not Qualify for ICHRA Participation?

Health insurance plan options are just as unique as the individuals who make up the payroll roster. And there are some coverages out there that may make the most sense to your employees but would make them ineligible for reimbursements through your company ICHRA. Here are a few of those examples.

Any Form of Group Plans Are Not Eligible

If you have an employee who is enrolled in a group plan of any kind, he or she is not eligible for reimbursements through your ICHRA. If you have a separate group plan that you offer to some of your staff, enrollment disqualifies them from ICHRA participation. It also includes anyone among your ranks who has coverage through a spouse or parent, as well.

Some Association Plans Are Disqualifiers

There are some association plans out there that offer great coverage options, separate from ACA guidelines or traditional group plans. These might include healthcare sharing ministries, association-based membership coverage, and even Tricare options. If you have employees leveraging any of these types of health insurance coverages, they will not be eligible for reimbursements through your ICHRA.

COBRA and Short Term

If any of your current employees are covered under Consolidated Omnibus Budget Reconciliation Act (COBRA) plans or short-term, limited-duration (STLD) plans, they cannot integrate into your ICHRA. COBRA coverage provides workers with health benefits at the expense of a former group plan. And STLD coverage is a plan that allows for short-term benefits but with limitations that prohibit users from using these types of plans longer than three years.

How Do Employers Substantiate Eligible Coverages?

Whether you have an internal team of ICHRA plan administrators or a third-party administrator, one job duty for the role involves substantiation. According to ICHRA guidelines, individual coverage will need to be verified to determine reimbursement eligibility.

How Often Business Should Enforce Substantiation

As a business with an ICHRA, you’ll have three distinct periods in which to verify participant health insurance coverage. Prior to the first day of a new plan year, every participating employee can complete an Individual Coverage HRA Attestation form to verify eligibility in your ICHRA and provide proof of qualified health insurance enrollment. Employers can also extend these forms to new hires on an individual basis as well as among existing staff ongoing, as needed.

Valid Proof of Health Insurance Coverage Metrics

There is some gray area in how you determine whether an employee’s proof of insurance is valid. If you or your administrators don’t have a reason to question the information provided to you, you can assume it’s likely authentic. You can, of course, challenge any proof you consider to be misleading or suspicious. But for the most part, the validity of the documents you review can be left to your discretion.

How Employees Can Provide Proof of Coverage

Employees can submit their proof of health insurance coverage in a couple of ways. According to the ICHRA requirements, individual plans can be verified via two channels. Submission through a third-party administrator is valid and usually includes a statement from the insurance provider or the exchange or in the form of a current insurance card. The second form of submission can be in the form of the attestation, as mentioned earlier. These examples of proof can be presented in physical form or digitally and should include current coverage dates.

Use this guide to help your company manage substantiation efforts with your ICHRA. And if you need additional help with exploring your ICHRA options or setting up your platform, let W3LL help! See what thousands of businesses are buzzing about with the cost-effective, flexible ICHRA solutions. If you’re ready to take the next ICHRA step or have questions about the many benefits of a third-party administrator partner, contact us.