If you’re looking for an ICHRA plan template, you should know that the many rules surrounding the individual coverage health reimbursement arrangement can change from year to year. If keeping up with changing regulations sounds overwhelming, the ICHRA platform from Take Command Health has built-in, automatic updates to ensure compliance. It will also ensure you have all the ICHRA plan documents you and your employees are going to need. Let's talk about those today.
ICHRA (pronounced ick-ruh) is a type of HRA that allows business owners to reimburse their employees for health insurance premiums and qualified medical expenses on a pre-tax basis.
Here's how it works.
First, the business owner sets the monthly reimbursement amount and the employees purchase an individual health plan that works best for them. After an employee submits receipts, the business owner simply reimburses them. The funds aren't subject to payroll tax from an employer standpoint and aren't considered income for the employee and taxed accordingly. Plus, the employer can skip the hassle of choosing and administering a group plan that would bring with it premium hikes and participation rate requirements.
How to set up an ICHRA
- Pick a start date.
- Set a cancellation date for your group policy (if applicable). This step is only for business owners currently offering group health insurance.
- Decide who will be eligible. One of the best parts about ICHRA is that you can divide employees into nine classes to determine what kind of benefit they receive.
- Determine a budget and set allowances. There’s no minimum or maximum limits on contributions!
- Establish legal plan documents. (That’s what we’re talking about today!)
- Communicate your new benefit to employees.
- Provide resources for employees to purchase individual health insurance.
As the only HRA administrator that also offers health insurance on the individual market, Take Command Health can provide the best on- and off-market options for employees based on their needs, budget, preferred doctors and prescriptions.
ICHRA plan template for three key documents
The legal agreement establishes the ICHRA for the employer and 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
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 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
Since the Individual Coverage HRA requires employees to purchase an ICHRA qualified plan for themselves (as opposed to picking a tier option from an employer sponsored group health plan), the employee notice is designed to guide employees in the process of purchasing health insurance from the marketplace which can be confusing if they haven't done so before. ICHRAs must provide a 90 day notice to eligible employees regarding the ICHRA and its interaction with premium tax credits and of the qualifying 60 day Special Enrollment Period (SEP) that is activated when an employee gains access to ICHRA.
The ICHRA Employee Notice will need to include the following information:
- Permitted benefit amount per employee & ICHRA start date for employee.
- An opt-out provision for the employee
- An explanation of potentially utilizing a premium tax credit if the employee opts out of ICHRA and the ICHRA allowance is deemed unaffordable.
- An explanation of what happens with the premium tax credit if the employee accepts to participate in ICHRA.
- The employee will need to inform the health insurance Exchange of ICHRA if they apply for APTC.
- A statement that ICHRA is not QSEHRA.
- Contact Information for employees to contact for help regarding their ICHRA.
- Statement that new access to ICHRA qualifies employees and dependents to a Special Enrollment Period (SEP) to purchase insurance from the Exchange for 60 days.
Looking for help with your ICHRA plan template?
Does this sound confusing? Don't worry. That's where Take Command Health's platform can help. This post walks you step-by-step through ICHRA administration, and just might convince you to let Take Command Health do the heavy-lifting and paperwork for you!
We'll handle all the accounting and legal legwork, take care of onboarding each of your employees, and make tax time easy and painless. You'll never have to hassle with receipts or worry about setting up a health plan again.
If you have any questions, just chat with us on the bottom right hand corner of your screen. We're here for you!