ICHRA setup is easy with Take Command's super simple ICHRA administration software. If you're looking to set up an ICHRA, this post is for you!
ICHRA Setup 2023
Individual coverage HRAs have taken off since they were introduced in 2020.
In fact, ICHRAs have seen triple digit growth since their inception, according to the HRA Council.
How to set up an ICHRA
- Pick a start date. The first step is pretty easy—establish a start date! Many companies tend to think about benefits on a calendar year basis during open enrollment, but the awesome part about an ICHRA plan is that it can happen any time of year and will trigger a special enrollment period so your employees can find plans on the individual market outside of the open enrollment dates.
- Set a cancellation date for your group policy (if applicable). This step is only for business owners currently offering group health insurance. You will need to cancel the group plan coverage before the start date of the new ICHRA. In order to avoid any gaps in coverage, ensure the group plan ends one day before the ICHRA begins. More on switching from a group plan to an HRA here.
- Decide who will be eligible. One of the best parts about ICHRA is that you can divide employees into nine classes to determine what kind of benefit they receive. These ICHRA classes include full time, part time, seasonal, employees working abroad, employees in a waiting period, employees working under a collective bargaining agreement, employees working outside the geographical area of the business, salaried employees, nonsalaried employees, temporary employees of a staffing firm, or a combination of any of those. Remember, employees must maintain Minimum Essential Coverage to be eligible, regardless of their class.
- Determine a budget and set allowances. Your next step is to determine how much you’ll give employees to reimburse them and whether you'll reimburse for premium costs only or premiums along with ICHRA eligible medical expenses. You can set a different monthly allowance for varying classes that you choose to include, and can even integrate this option with a traditional group plan if you choose. From there, you can increase allowance amounts based on family size or age if you so choose. And remember, there’s no minimum or maximum limits on contributions!
- Establish legal plan documents. The IRS and Department of Labor have a variety of rules to follow regarding HRAs in 2023. Failure to comply with the rules will result in penalties. Your legal plan documents, which will include a formal plan document, a summary plan document and an employee notice, must include the ICHRA policies including monthly reimbursement amounts, class structure, claims processes, reimbursement eligibility, and information on HIPAA and other procedures involving privacy. Check out our posts on ICHRA plan documents or the 90 day employer notice for ICHRA for more details. Check out this post for more information on the ICHRA notice requirement.
- Communicate your new benefit to employees. Since you are going through the work to set up the ICHRA employee benefit, you’ll want to make sure your employees know how to use it. Practical information to include: start date, annual HRA allowance, and how to obtain coverage. Our team at Take Command Health can help onboard your team for you.
- Provide resources for employees to purchase individual health insurance. Choosing a health insurance plan on the individual market is a daunting task, especially if this is new territory for your employees. As an employer, you can provide your employees with tools and information to guide their decision making. Just beware, federal rules prohibit employers from being involved in the actual decision making when it comes to choosing a provider or policy.
As the only ICHRA administrator that also offers health insurance on the individual market, Take Command can provide the best on- and off-market options for employees based on their needs, budget, preferred doctors and prescriptions.
Get started today!
Is 2023 the year your company or client is going to be a part of this exciting change? Chat with our team with any questions you may have about these new, tax-friendly benefits or check out our awesome ICHRA FAQ post or our new ICHRA Guide for more information on its background, setup process, requirements, and rules for ICHRA plans.
Additional resources →
- Learn about ICHRA Rules
- Learn about ICHRA Tax Benefits
- Learn about ICHRA Classes
- Learn about ICHRA Requirements
- Learn about ICHRA Regulations
- Learn about ICHRA Plan FAQs
- Learn about our ICHRA administration platform
Note: We always recommend discussing any HRA tools like QSEHRA or ICHRA with your accountant first.
This post has been updated to reflect the latest regulatory and policy changes in 2023.
I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!