The administrator of an ICHRA said to us one day, "I know this was a big change moving from our group plan to this ICHRA thing. I care about my people and I don’t want anyone to get left behind or miss out on their reimbursement due to a technicality.”
At Take Command Health, we also want to prevent anyone from getting left behind or missing out on this ‘ICHRA thing.’ We’re here to help. Let’s start by explaining what ICHRA compliance is all about.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement.
Awesome. What does that actually mean and how do I make sure my employees are compliant?
Individual Coverage. Putting the IC in ICHRA since 2019. To put ICHRA Compliance in the simplest terms possible: to be ICHRA Compliant, you must have individual coverage. Pretty easy to remember right? It’s in the title!
Common ICHRA compliance questions we hear every day
What is considered individual coverage?
Any coverage purchased on the exchange (aka Healthcare.gov aka Obamacare) is considered individual coverage. That includes insurance purchased on state exchanges. Medicare is also considered ICHRA Compliant individual coverage.
But I’m on a family plan. Will that work?
Was that family plan purchased from the exchange?
Then that is ICHRA compliant individual coverage.
Wait a minute. Individual means 1, and family is obviously more than 1. Why is that?
Individual Coverage doesn’t mean coverage is limited to only one person. Individual coverage really means you went to find coverage individually, ie not part of a group.
Based on this new definition, what types of coverage are not acceptable for ICHRA compliance?
The short version: If your plan requires some sort of ‘membership,’ waiting period, preexisting conditions waiver, or the coverage you have is only available to your specific ‘group’ then that plan is very likely not ICHRA compliant.
In many of these plans you can search the plan for: ‘ACA, Affordable Care, MEC, or Minimum Essential Coverage – and if that plan says anything along the lines of, “does not meet ACA requirements,” “Does not meet MEC/Minimum Essential Coverage,” then that plan is not ICHRA Compliant.
Specifically, what plans are not considered to be ICHRA compliant?
- Group plans: Any employer sponsored group plan, retirement plan, union plan, etc. does not meet ICHRA compliance. You can ask yourself the question: “Do I have to be a part of _____ to qualify for this coverage?” If you answer yes to this question then it is not ICHRA compliant. We have to go back to the idea of “Individual Coverage” – If the only way to participate in a plan is to be a part of a group, then it will never meet the criteria of Individual Coverage.
- Government plans: As of the time of writing, with the exception of Medicare – No government sponsored health plans are ICHRA compliant. This includes Tricare, FEHB plans (Federal Employees Health Benefits), and Medicaid, to name a few.
- Alternative health coverage options: Short-term plans and faith-based plans are not compliant with ICHRA
That sure doesn’t leave many categories of health insurance that are compliant with ICHRA.
Well, sort of. To be frank, one of the reasons the government created ICHRA was to encourage individuals to purchase health insurance directly off the exchange that provides quality, ACA compliant coverage. It is called the Individual Coverage Health Reimbursement Arrangement for a reason. Any coverage that does not fall under the Individual Coverage concept, (with the exception of Medicare), is not ICHRA compliant.
So we can only be compliant with ICHRA by purchasing directly from the exchange?
Definitely not. Individual coverage can also be purchased directly from an insurance carrier (considered an off-exchange plan) and will be ICHRA Compliant as long as that coverage is ACA compliant (link to ACA compliance) and meets Minimum Essential Coverage (MEC) (link to MEC info).
Medicare is also ICHRA compliant. Essentially, ICHRA requires individuals to purchase a qualified health plan, in other words, a major medical plan on or off the exchange that is MEC compliant.
Wait, what's a qualified health plan?
The regulatory rules that formed ICHRA say this about compliant health plans: A Qualified Health Plan for ICHRA is a major medical plan that can be purchased on or off the Exchange. It must meet the minimum requirements as outlined in Public Health Services (PHS) Act Section 2711 and Section 2713. These two provisions require no annual or lifetime limits on the dollar amount for coverage of essential health benefits and full coverage of preventative health services to be covered with no shared cost to the insured.
Reading between the lines of the legal jargon: If a plan purchased directly from an insurance carrier has limits on coverage or does not cover preventative care, then it is not a qualified health plan and will not be ACA compliant.
Why didn’t you mention ACA compliance regarding plans from the exchanges?
All health insurance plans purchased from the federal or state exchanges are ACA compliant.
“A lot of people really loved their sharing plans. When we made the switch to ICHRA in 2020, I was frustrated that our employees had to choose between participating in ICHRA or staying on their sharing plan. I know it was rumored that sharing plans were going through some major classification changes for 2021, are they now ICHRA Compliant?”
Well I’ve got some good news and some bad news. I always like to start with the bad news: sharing plans are still not ICHRA compliant. Have no fear, there is good news! Sharing plans are eligible for reimbursement under ICHRA.
...But you just said...?
Yes, I did. Sharing Plans are not ICHRA compliant and likely never will be. Remember ICHRA Compliance is all about Individual Coverage or Medicare. A sharing plan is neither.
However, as of 2021, sharing plans are now categorized as a qualified medical expense which can now be reimbursed as long as it is alongside ICHRA compliant health coverage (i.e., a plan purchased off the exchange.)
...but wouldn’t that mean someone has ‘double coverage’ ?
Yes it would. However, depending on someone’s circumstances, their ICHRA allowance, and their preference for doctors / networks, etc, this has already become a viable option for a lot of people.
Since their inception, ICHRA has had the most strict rules and regulations compared to its more well-known sibling QSEHRA. And while keeping a sharing plan alongside an ICHRA compliant health plan may not be for everyone, I’ll take options, over no options any day of the week.
Other ‘disqualifiers’ for ICHRA Compliance
Tax Credits and ICHRA. A person cannot accept federal tax credits, or accept any state / federal premium subsidy for that matter, and participate in ICHRA. A health insurance plan purchased off the exchange that includes a premium tax credit (PTC), or advance premium tax credit (APTC) is not compliant with ICHRA.
My employee only has a $20 tax credit on their $500+ medical premium. Surely that doesn’t exclude them from participation in ICHRA?
Yes, and no. Simply being eligible for a tax credit has no bearing on ICHRA compliance. However, if a tax credit is on someone’s bill, that means they have accepted it. The employee will have to call their federal or state exchange and have their tax credit removed before their plan is considered compliant with ICHRA.
Need help with ICHRA compliance?
We know this can be confusing stuff. Our team is here to help admins and employees to understand ICHRA compliance and enjoy the many benefits of the individual coverage HRA. Just chat with us at the bottom right hand corner of your screen or email us at firstname.lastname@example.org.