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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? 

ICHRA classes are a great benefit of ICHRA. Here's a quick recap:

  • Full-time employees
  • Part-time employees
  • Seasonal employees
  • Employees covered under a collective bargaining agreement
  • Employees in a waiting period
  • Foreign employees who work abroad
  • Employees working in the same geographic location (same insurance rating area, state, or multi-state region)
  • Salaried workers
  • Non-Salaried workers (such as hourly workers)
  • Temporary employees of staffing firms
  • A combination of two or more of the above

But what happens if an employee changes classes? Can that happen?

How to change classes in an ICHRA

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?

When an employee moves between classes in an ICHRA plan, it can be a relatively easy fix as long as the re-classification is not due to termination of employment or reduced working hours.

In such cases, the employee may be eligible for group continuation of coverage or COBRA. However, even if an employee stops enrolling in an ICHRA, they can still request medical care reimbursement for the coverage period they were enrolled in. It's important to note that if an employee loses their ICHRA coverage, they may qualify for a special enrollment period (SEP) for loss of minimum essential coverage (MEC) to obtain individual health insurance coverage either on or off of the Exchange.

The ICHRA plan is a versatile benefit that can be designed to fit the unique needs of employees, and our team of design consultants is always available to help. With the potential to benefit up to 11 million American workers, it's an exciting time for healthcare benefits.

For more information on ICHRA, check out our FAQ page or read our ICHRA Guide.

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.

See if ICHRA is right for me

This post was originally written in 2019 and has been updated for 2023.