The Individual Coverage Health Reimbursement Arrangement (ICHRA) is coming January 2020. That means that starting next year, employers of any size can offer tax-free reimbursements for their employees' medical expenses at varying rates based on class. This is a win-win for everyone, bringing more flexibility and budget control for owners and more access for employees.
Here's what to know about ICHRA eligibility requirements for employees.
Who is eligible for ICHRA?
The most critical requirement for employee eligibility for ICHRA is having a health insurance plan that meets Minimum Essential Coverage (MEC).
Like a QSEHRA, ICHRA is only available to those whose coverage meets PHS 2711 & 2713 requirements ($0 preventive and no annual or lifetime limits). The employee can be the primary insurance carrier or the dependent on a family plan. Remember that offering an ICHRA triggers a Special Enrollment Period (SEP) for employees to find a plan outside of the traditional open enrollment schedule.
While not an eligibility requirement, premium tax credits also come in to play here when you consider the financial feasibility for the employee. If the ICHRA isn't considered affordable (as in, the remaining amount an employee must pay for a self-only silver plan (this is the lowest cost silver plan) on the exchange is more than 9.86% of their household income ), then employees can opt out of the ICHRA on a year by year basis.
Not all ICHRA benefits are created equal
While the only two critical components for eligibility are meeting MEC and foregoing PTCs, it's important to note that all employees aren't necessarily treated equally when it comes to ICHRA reimbursements.
Different employee classes can be awarded different levels of benefits. This is a hallmark characteristic of the new HRA that gives business owners a lot of flexibility with the design.
The proposed employee classes in regulations include:
- Full-Time Employees
- Part-Time Employees
- Seasonal Employees
- Employees covered by a collective bargaining agreement
- Employees who have not satisfied a waiting period for coverage
- Employees under age 25
- Non-Resident aliens with no US-based income
- Employees whose primary site of employment is in the same rating area
These classes, while still not finalized, shed some light on who will be eligible. ICHRA will be available to full-time, part-time, seasonal, non-resident aliens, employees in different locations, and more.
We’re here for you! Let us know how we can help you with your ICHRA questions. Be sure to check out our other FAQ post here or chat with our team on the website any time.