In 2020, the U.S. Government gave employers the option to offer an ICHRA, Individual Coverage Health Reimbursement Arrangement, instead of offering a traditional job-based health plan. Since this tax-free tool is still relatively new, you'll want an experienced ICHRA administrator, ICHRA software or ICHRA platform to help you stay compliant (and do the heavy lifting for you).
ICHRAs are a type of HRA (also known as health reimbursement accounts) that are a great alternative for employers looking to save on premium costs and give their employees a choice over the type of coverage they want.
An ICHRA allows the employee to purchase their own individual or family health insurance on the exchange and be reimbursed for the monthly premium. With this model comes a new way to process healthcare coverage meaning you will need an experienced company to administer the ICHRA.
What is an ICHRA Administrator?
First, you’ll want to understand what an ICHRA administrator is and what they do.
An ICHRA administrator is a professional who helps businesses set up and manage their Health Reimbursement Arrangements (HRAs). They can be a valuable partner in helping your business establish and maintain a compliant HRA.
An administrator is versed in the knowledge needed to bring an ICHRA to your employees.
The Role of an ICHRA Administrator
Setting up an ICHRA isn’t too difficult but there are rules and regulations that need to be followed. ICHRA administration is responsible for seeing the process and implementation by taking the following steps:
1. Assist with the setup of the ICHRA
The administrator assists with designing the plan and determining eligible employees. They also help with determining budgets and setting up legal documents.
2. Helping employees enroll in the ICHRA
Change management is key to a successful ICHRA launch. A plan administrator will assist with communicating the new plan and assisting with employees' enrollment on the exchange.
3. Processing reimbursements
To process reimbursements, employees need to provide proof of qualified medical expenses including individual insurance premiums.
4. Managing changes to the ICHRA rules and regulations
Healthcare policy continues to change and evolve. The job of an administrator is to stay up to date on the latest rules and regulations so employers don’t get slapped with a fine.
5. Answering employee questions
Beyond the initial sign-up process, employees will continue to have questions regarding reimbursements. An administrator can facilitate questions and answers while maintaining the employee’s privacy.
Why Work With an ICHRA Administrator?
Some employers may be tempted to administer the ICHRA themselves. While it’s possible, Take Command recommends not going that route. There are a few practical reasons.
- Expertise: An experienced ICHRA administrator will have a deep understanding of the rules and regulations surrounding HRAs, which can help ensure compliance and avoid costly mistakes. Knowing that your ICHRA is being managed by a professional can give you peace of mind and free up your time to focus on other aspects of your business.
- Record Keeping: The IRS requires businesses to keep records for up to 7 years. An administrator keeps digital records organized and safe.
- Employee Privacy: As we mentioned earlier, employee privacy needs to be considered when implementing an ICHRA. To qualify for reimbursements, employees need to submit receipts for healthcare. These are considered Protected Health Information (PHI) and under the Health Insurance Portability and Accountability Act of 1996 (HIPPA), employers asking for employee medical records is a HIPAA privacy violation.
→ Learn more about ICHRA compliance with this helpful post!
How to Choose the Right ICHRA Administrator for Your Company
Since ICHRAs have only been around a few years, it may be difficult to find an experienced administrator. Many insurance brokers and businesses are just becoming familiar with them.
That’s why we recommend finding an administrator who is knowledgeable about Health Reimbursement Arrangements. This will ensure no regulations or processes get missed. Second, find an administrator who is willing to work with your specific needs.
Each business has a unique set of needs and problems to solve and a qualified ICHRA administrator can help you navigate any issues.
Finally, make sure the administrator has a reputable reputation and track record with other clients.
Complete List of Questions To Ask When Interviewing Potential Administrators
When shopping for an ICHRA administrator, it is important to ask questions that will help you understand the capabilities of the administrators you are considering and ensure they are a good fit for your company.
Here are some questions to get you started:
- Reputation and Customer Service
- How long has the administrator been in business?
- What is the size of their customer base?
- Do they have experience with ICHRAs? If so, how many?
- What is their customer satisfaction rating?
- Can they provide references from satisfied customers?
- Do they have any negative reviews? If so, why?
- Plan Design
- What is included in their ICHRA plan?
- Are they able to help us determine a budget?
- Do they make sure we meet all legal requirements?
- Enrollment and Reimbursements
- Do they educate the employees on the ICHRA?
- Do they help employees enroll in the correct plans?
- Do they have an easy-to-use platform for reimbursements?
- What is the average time it takes them to process claims?
- What kind of ongoing customer support do they offer?
- What is their fee structure?
- Are there any hidden fees?
How to Get Started with An ICHRA Administrator
If you’re ready to get started with an ICHRA or learn more about it, contact us. Take Command’s ICHRA administration platform allows you to design a plan that your employees will love. Our team makes sure your employees understand the change and are prepared to get the most out of their ICHRA.
An ICHRA can be a great way for businesses of all sizes to offer health reimbursement assistance to their employees. By following these simple steps, you can get started with an ICHRA administrator and begin offering this benefit to your employees right away!
With 15 years in the communications field, Briana is a content writer with a passion for making complex issues readable, understandable, and digestible. Her career is layered with experience working with Fortune 100 companies, non-profits, and start-ups. She specializes in employee benefit communication. Briana is a married mother of two young girls in the Midwest. She loves yoga, volleyball, and reading by the pool.