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ICHRA plan

ICHRA plan 101 | what it is, how it works, who it helps

An ICHRA plan is a tax-advantaged new model that allows employers to reimburse for health insurance. The individual coverage health reimbursement arrangement (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. Read on to find out all about ICHRA plans.

What is an ICHRA plan?

An ICHRA plan is a new, tax-advantaged way of offering benefits to employees. ICHRA plans allow employers to reimburse employees for individual health insurance rather than buying it for them. Established in 2020, this new employee benefits model is available to large and small businesses and satisfies the employer mandate. 

The cool thing about ICHRA is that it allows employers to contribute different amounts to different types of employees, thanks to ICHRA employee classes. It must be fair and consistent across classes, and classes can include things like seasonal employees, collective bargaining agreements, salary vs hourly, etc. 

Now let's talk about what types of plans employees can purchase to use with their ICHRA plan.

Ask us how ICHRA might work for your company or client!

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 provides Minimum Essential Coverage.

ICHRA plan options

The following plans are allowed with ICHRA plans:

  • Individual Major Medical Plans
    (on or off-exchange)
  • Catastrophic Plans (limited to under age 30
    or qualify for a hardship exemption)
  • Medicare Part A + B or Part C
  • Student Health Insurance

On the other hand, the following plans do not work with ICHRA:

  • Short-Term Limited Duration Insurance (STLDI) - While short term plans can not be integrated with ICHRA, they do work with EBHRA.
  • Health Care Sharing Ministries (HCSM) 
  • Fixed Indemnity Plans
  • Excepted benefits coverage only (vision, dental, etc)
  • Association Health Plans
  • Multiple Employer Welfare Arrangements (MEWA)
  • Spouse’s insurance - Individual coverage integration unfortunately does not include coverage on a spouse's plan. This post on ICHRA and spouse's insurance has more information and options.

We dive deep into ICHRA pros in cons in this post. 

Ask us about ICHRA design ideas for your company!

How do employees choose an individual health plan to use with ICHRA?

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).

Pro-Tip: For clients using Take Command as their ICHRA administrator, we will automatically generate the documents your employees need and can help them search for and enroll in a plan online.

Next Steps: Finding the right ICHRA plan

Ask our experts how to get started today (it's easy!)

Employees looking for qualified ICHRA plans can shop and compare plans directly at Take Command. 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.

Additional resources →