ICHRA

How to set up an ICHRA (Individual Coverage HRA) in 7 easy steps

by Amy

 * Updated June 20, 2019*

Good news: Beginning in Q4 of 2019, employers will be able to set up an ICHRA that will be effective January 1, 2020. Our team of benefit consultants is on standby to answer all of your questions along the way! 

Building on what we’ve learned from QSEHRA, our team is currently working on innovative tools to help ICHRA administration be as easy and integrated as possible for our clients.

Here are the basic 7 steps it takes to set up an ICHRA.

How to set up an ICHRA

  1. 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 ICHRA 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.
  2. 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. 
  3. 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 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. 
  4. Determine a budget and set allowances. Your next step is to determine how much you’ll give employees to reimburse them for premium costs and 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!   
  5. Establish legal plan documents. The IRS and Department of Labor have a variety of rules to follow regarding HRAs. Failure to comply with the rules will result in penalties. Your legal plan documents, which will include a formal plan document and summary plan document, must include the ICHRA policies including monthly reimbursement amounts, class structure, claims processes, reimbursement eligibility, and information on HIPAA and other procedures involving privacy.  
  6. 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.
  7. 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 HRA administrator that also offers health insurance on the individual market, Take Command Health can provide the best on- and off-market options for employees based on their needs, budget,  preferred doctors and prescriptions. 

Next Steps

Is your company or client 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 new ICHRA Guide for more information on its background, setup process, requirements, and rules. 

Note: We always recommend discussing any HRA tools like QSEHRA or ICHRA with your accountant first.  

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Hi, I'm Amy! 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!