ICHRA stands for “Individual Coverage Health Reimbursement Arrangement” and is the newest standalone HRA that enables employers of all sizes to reimburse their employees tax-free for health insurance premiums and medical expenses. Although ICHRA is new, it represents an evolution of another HRA called a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) that was created by the Obama Administration a few years earlier. But is an ICHRA considered insurance? Let’s answer that.
Making sense of HRAs
Because ICHRA is a type of health reimbursement arrangement, or HRA, it is not health insurance. The 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. Under these arrangements, employees purchase their own health insurance on the open market and then submit claims to their employer to get reimbursed.
While there are several ways to meet this requirement, not all health plans can be integrated with ICHRA.
What is a Qualified Health Plan?
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 is considered compliant ICHRA insurance?
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, B, C and D
- Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
What isn't considered compliant ICHRA insurance?
- 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.
How do I buy ICHRA 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).
Next Steps: Finding the right insurance plan for your ICHRA
This individual coverage HRA option could give 11 million workers more health insurance options. Employees looking for qualified ICHRA plans can shop and compare plans directly at Take Command Health. 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 which should answer most questions! Our team of HRA experts is always close at hand to answer questions. Just chat with us at the bottom right-hand corner of your screen.