So you've decided to set up an ICHRA and choose an ICHRA administration tool! Good work. Your company or client is going to enjoy some major benefits very soon. ICHRA will be effective Jan 1, 2020, but it's never too early to start getting your ducks in a row when it comes to all that dreaded paperwork. Don't worry! We've got you covered.
Before we jump in, here is our friendly reminder that ICHRA (aka the Individual Coverage HRA) will not be available until January 2020, but businesses are already preparing for this switch and will be able to get the ball rolling in Q4 of this year. That's why we want you to understand everything you'll need so you can be ready to go when the time comes. Every ICHRA plan document we outline in this article is based on what we assume will happen when the updated regulations are announced and based on what is required for a similar type of HRA, QSEHRA. We will keep this article updated as more information comes in!
Now let's go over what we assume you’ll need when it comes to ICHRA plan documents.
ICHRA plan documents you'll need
The legal agreement establishes the ICHRA for the employer.
The legal agreement should include:
- Named fiduciaries and plan administrators and their responsibilities
- Eligibility requirements for the ICHRA
- Effective dates of participation
- Description of benefits provided and excluded
- How the ICHRA is funded and how it makes payments
- Claims procedures
- HIPAA privacy officers and rules relating to the use of protected health information (PHI)
- Information on federal mandates
- The procedure for amending the plan
- The procedure for plan termination
Ok, moving on.
Employees must be provided a written notice in the form of a Plan Summary. The Plan Summary is a condensed, user friendly explanation (psst: go easy on the legal-ease!) of the ICHRA benefit and how it works. This is a great place to include information on the different classes of benefits, since a company can scale benefits across nine different classes and a helpful link to the Take Command Health platform if employees need help choosing the most affordable plan based on their unique needs, doctors, prescriptions, etc. Giving employees as many resources up front will ease the transition, especially if they are shopping on the individual market for the first time.
ICHRA Employee Notice
While the final guidance isn’t out and we don’t yet have IRS instruction on what should be included in an employee notice, we will lean on the general ideas surrounding QSEHRA employee notices as a framework.
The ICHRA Employee Notice will likely need to include the following information:
- Permitted benefit amount per employee & ICHRA start date for employee.
- A statement that the eligible employee must inform any Marketplace to which the employee applies for advance payment of the premium tax credit (APTC) of the amount of the provided benefit.
- A statement that explains how affordability is calculated and how it affects eligibility for premium tax credits. If the ICHRA is deemed affordable, employees will not be eligible for tax credits. If it’s not deemed affordable, then the employee has a choice to opt out.
- A statement that if the eligible employee does not have minimum essential coverage for any month, then the employee may be liable for an individual shared responsibility payment under Section 5000A of the Affordable Care Act for that month and that reimbursements under the ICHRA for expenses incurred in that month will be included in the employee’s gross income.
The Employee Notice will likely be delivered electronically according to the guidelines the IRS has set forth.
How Can Take Command Health Help?
Does this sound confusing, expensive or both? Don't worry. We are here to make your life easier. With our ICHRA administration tool (which we are so excited to launch!), set up will be a walk in the park. We'll handle all the accounting and legal legwork, take care of on-boarding each of your employees (or clients), and make tax time easy and painless. While we wait for the final guidance to come out, we are working on innovative tools that will make this process as simple and intuitive as possible.
Want to learn more? Check out our brand new ICHRA guide or chat with one of our HRA experts online. We'd be happy to help!