ICHRA health insurance is a type of health reimbursement arrangement, or HRA that allows employers to reimburse employees for health insurance tax-free. ICHRA Plans refer to a legal arrangement between an employer and their employees to reimburse for medical expenses and/or health insurance premiums on a tax-free basis. The individual coverage HRA (ICHRA) is one of only two types of HRAs (the other is QSEHRA) which allows employers to reimburse employees tax-free for qualified individual insurance premiums.
What is ICHRA health insurance?
ICHRA health insurance is a new way of doing employee benefits. Under these arrangements, employees purchase their own health insurance on the open market and then submit claims to their employer to get reimbursed.
The ICHRA requires employees and their dependents to be enrolled in a qualified health plan for each month the employee and their family members are reimbursed through ICHRA. While there are several ways to meet this requirement, not all health plans can be integrated with ICHRA.
ICHRA health insurance: what qualifies?
The most important thing for employees to do to use a company ICHRA plan is to sign up for a qualified health plan, which basically means it provides coverage of essential benefits such as preventative and wellness services and emergency services, as well as limits on cost-sharing.
The following plans can be integrated with ICHRA.
- Major medical plans purchased on the exchange (This post explains what the Bronze, Silver, and Gold tiers mean.)
- Medicare - Part A - "Hospital insurance" covers costs from the hospital for free and acts as "classic Medicare." It's considered a major medical insurance plan that everyone is required to have.
Part B - "Medical insurance" that covers 80% of approved doctor visits and outpatient procedures after annual deductible is met. Also considered major medical and a requirement.
Part C - This is considered supplemental insurance or hospital and doctor coinsurance. Cost depends on the plan you select.
Part D - "Prescription insurance" helps you pay for your prescriptions. Pricing depends on the plan you select and your income. This is not considered a major medical plan or sufficient to meet minimum essential coverage requirements. - Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
Read up on plans that integrate with ICHRA in our ICHRA compliance post.
What is a Qualified Health Plan for ICHRA?
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.
Essentially, ICHRA requires individuals to purchase a qualified medical plan that is MEC compliant.
What doesn’t qualify as ICHRA health insurance?
At a hight level...
- Sharing ministries, such as Medi-Share, do not qualify.
- Individual coverage integration unfortunately does not include coverage on a spouse’s insurance plan.
- Short term plans can not be integrated with ICHRA, but they do work with EBHRA.
- ICHRA cannot be integrated with Tricare.
The Individual Coverage HRA (ICHRA) requires employees and their dependents to be enrolled in a qualified health plan for each month the employee and their family members are reimbursed through ICHRA. While there are several ways to meet this requirement, not all health plans can be integrated with ICHRA. Here’s what you need to know.
Which health plans are reimbursable with ICHRA?
The following plans can be integrated with ICHRA. These are all considered Qualified Health Plans.
- Major medical plans purchased on the exchange (Bronze, Silver, and Gold)
- Medicare (Part A+B, or Part C)
- Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
More ICHRA Insurance Questions, Answered
Is Medi-Share considered a Qualified Health Plan?
The final rules for ICHRA clearly state that an employee must have an individual marketplace plan to integrate with their employer-sponsored HRA. Sharing ministries do not qualify.
Can ICHRA integrate if I’m on my spouse’s insurance?
Individual coverage integration unfortunately does not include coverage on a spouse's plan. Check out the this post on ICHRA and spouse's insurance for even more information and options.
Do short term plans work with ICHRA?
Short term plans cannot be integrated with ICHRA, but they do work with EBHRA.
Does Tricare work with ICHRA?
Under the final rules, individual coverage HRAs cannot be integrated with TRICARE.
Is it difficult to purchase an ICHRA qualified health plan?
The good news is, securing the right type of plan to participate in ICHRA is not difficult.
Employees offered the Individual Coverage HRA qualify for a Special Enrollment Period upon the initial offering.
This gives employees 60 days from the date that they become eligible for the ICHRA to purchase a qualifying plan outside the normal open enrollment period (open enrollment typically runs Nov 1-Dec 15 nationwide).
How do I buy ICHRA health insurance?
Employees offered the Individual Coverage HRA qualify for a Special Enrollment Period upon the initial offering. This gives employees 60 days from the date that they become eligible for the ICHRA to purchase a qualifying plan outside the normal open enrollment period (open enrollment typically runs Nov 1-Dec 15 nationwide).
Take Command is here to help you set up an ICHRA
With the ability to compare plans based on preferred doctors and prescription coverage, buying a plan has never been easier. We've also written a comprehensive guide with pretty much everything you'll ever need to know. Employees covered by an HRA can Shop for individual plans directly through Take Command with the help of our dedicated enrollment team. Employers interested in structuring coverage or comparing options can talk with an expert and get started with a custom design in minutes.
Additional resources →
- Learn about ICHRA Classes
- Learn about ICHRA Rules
- Learn about ICHRA Requirements
- Learn about ICHRA Regulations
- Learn about ICHRA Plan FAQs
- Learn about our ICHRA administration platform
