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ICHRA spouse's plan individual coverage HRA

Will ICHRA reimburse employees on a spouse’s plan?

With the Individual Coverage HRA (ICHRA), employers have the ability to reimburse their employees for medical expenses and individual healthcare premiums tax-free while also having more control over their budget and plan selection. It’s important to note, however, that if an employee is on a spouse's plan, there are differences between reimbursement through ICHRA and its predecessor QSEHRA that should be considered.

Can ICHRA reimburse employees for spousal plan premiums?

Type of plans that can be integrated with the Individual Coverage HRA

ICHRA is only an option for employees (and their dependents) who are actually enrolled in a qualified health plan. That means plans from the individual market, student health insurance, and Medicare Parts A and B or C. 

The final rules are pretty clear on what is not considered an ICHRA-compliant plan

Individual coverage integration unfortunately does not include coverage on a spouse's plan, short-term plans, sharing ministries like Medi-Share, or TRICARE

What we hope is that the Departments will take another look at this aspect of the final rules. There are a few hurdles to get through to make reimbursement for spouse's plans feasible, but we think it would be a great benefit. 

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How to choose between ICHRA and a spouse's plan

Since ICHRA can't be used to reimburse on a spouse's plan, it means that a couple needs to analyze their choices to see what works best for them from a financial standpoint. Think of it this way: if two people that were married were both offered individual plans through their employer, they would choose to forego the benefit from one based on which one offered better coverage or a better price, depending on their criteria.  

The same holds true for choosing between an ICHRA or coverage on a spouse's plan. Which scenario benefits the couple most in 2023? It depends on the amount of reimbursement through the employer's ICHRA offering paired with an ICHRA-compliant plan or the caliber and coverage of the health plan from the other spouse's employer.

But remember!

If two spouses are offered an ICHRA, they can purchase one plan and qualify for ICHRA but cannot double-dip reimbursements. Very important! 

A noteworthy detail to consider is that if the spouse has procured an individual marketplace plan, the employee is eligible to participate in ICHRA and request reimbursement for the family premium rate. This is not possible, however, for group plans. Keep this in mind when making your decision between ICHRA and a spouse's plan.

Still need help? 

Chat with our team with any questions you may have about these new, tax-friendly benefits or check out our ICHRA FAQs or our ICHRA Guide for more information on its background, setup process, requirements, and rules. 

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

This post was originally written in 2019 and has been updated in 2023 to reflect the latest policy and regulatory updates.


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