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changing classes within an ICHRA, individual coverage HRA

Changing classes within an ICHRA: Problematic or an easy fix?

As we’ve discussed before, the individual coverage health reimbursement arrangement, ICHRA (ick-rah) is a rockstar amongst HRAs, mostly because of its unique class structure. The designated employee classes allow businesses to group employees so that they may provide an essentially “tailor-made” benefits package. But what happens when an employee changes classes? 

There are situations when an employee moves out of a class offering an individual coverage health reimbursement arrangement into a different class that is offered either a traditional group health plan, a different ICHRA reimbursement level, or no coverage at all.

So, what happens if an employee goes from full-time to part- time or moves to a new location but still works for the company?

Movement between classes happens and can be an easy fix as long as the re-classification is not due to termination of employment or a reduction in hours (more info on the group continuation of coverage and COBRA right here). Even if an employee who stops enrollment in an ICHRA does not have a right to continuation of coverage, the ICHRA must allow the participant to request medical care reimbursement for the coverage period. If an employee loses their ICHRA coverage they may qualify for an SEP (special enrollment period) for loss of MEC (minimum essential coverage) to individual health insurance coverage on or off of the Exchange.

If an employee moves from a class receiving an ICHRA to another class receiving a different reimbursement level, the final rule indicates that any unused funds can be transferred to the new class/ new individual coverage HRA group.

Still need help?

Our team of design consultants are waiting to help you. ICHRA is a simple benefit that can be designed to maximize your health budget. In fact, the White House estimates it will benefit up to 11 million American workers in the next few years (how exciting is that!?).

For more information, check out our ICHRA FAQ page or read our ICHRA Guide or chat with our team with any questions you may have about these new, tax-friendly benefits. We would be happy to help.