Individual Coverage Health Reimbursement Arrangement (ICHRA)

Read Oswald's latest ICHRA article published by Crain's Cleveland
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Individual Coverage Health Reimbursement Arrangements (ICHRAs) were made available as of January 1, 2020. This progressive new coverage allows employers, regardless of size, to provide benefits without offering a group health insurance plan to all eligible employees. This simple reimbursement model is tax-free to employers and employees alike.

How does an ICHRA Work?

  1. Employers decide the level of reimbursement. There is no floor or ceiling requirement. The employer will also determine which classes of employees are eligible for the plan.
  2. Employees purchase individual plans that fit their needs and budget.
  3. Reimbursement claims are submitted by the employee.
  4. Valid, qualifying claims are reimbursed by the employer.

Benefits of an ICHRA

  • Employers’ health benefits change from defined benefit to defined contribution plans
  • Employers eliminate the need to design health plans and negotiate premiums with carriers
  • Employees decide the level of medical benefits they need
  • Employers that may have been previously unable to provide benefits due to cost now have another option

Employee and Employer ICHRA Eligibility

Plans that are not eligible for reimbursement include short-term medical or limited medical plans. Employers can choose to classify eligible employees in a variety of ways and have different reimbursement rules for each class. The same reimbursement must be offered to all eligible members in each class. Also, employees that are eligible for an employer’s group plan are not eligible for the ICHRA. There is no requirement for an employee to participate in the reimbursement program.

Permissible employee classes are:

  • Full/Part Time/Seasonal/Temporary
  • Salaried/Non-Salaried
  • Employees covered by a Collective Bargaining Agreement (CBA)
  • Employees that have not satisfied a waiting period
  • Employees in the same geographic area
  • Non-resident aliens
  • Any combination of two or more of the above

Note also that current employees in a classification may be offered a group health plan, while newly hired employees in the same classification are offered in ICHRA.

Employee Opt-Out

Employees must annually be given an option to opt-out of the reimbursement; some employees may benefit more by obtaining premium tax credits (PTC) from the Exchanges.

Expected Benefits Health Reimbursement Arrangement (EBHRA)

This is another coverage that can allow employers to extend their benefit offerings. EBHRA is available to all eligible employees, including those not enrolled in a company’s health plan. There is an annual limit of $1,800 annually, which has been indexed for inflation after 2020. Unused funds can be rolled over into the next year. Unlike ICHRA, the same option must be offered to all eligible employees regardless of class. Employees can be reimbursed for:

  • Dental and Vision Premiums
  • Out of pocket expenses for medical care
  • COBRA Premiums
  • Out of pocket expenses for excepted benefits, such as dental and vision expenses

Oswald Companies Can Walk You Through the Entire Process

We have the capabilities to handle your implementation of your ICHRA for the entire process. Our benefit advisors will assist with your current group health plan offerings. We can determine if an ICHRA is the right path for your company and your employees. Click HERE to learn more.

Should your company enroll employees in an ICHRA, Oswald has enrollment specialists who can assist your employees with their enrollment in individual health insurance plans or Medicare. In our acquisition of UROne Benefits™, we have extended our capabilities to now offer family, individual and Medicare coverage. Oswald Companies can be your all in one solution provider for ICHRA and individual health plans. Our goal is to keep the process simple for employers and employees to create a satisfying client experience.