* Updated July 22, 2019* Once the Individual Coverage HRA (ICHRA) is fully adopted by employers, the Departments of Labor, Health and Human Services, and the Treasury expect more than 11 million employees and their family members will be offered this new benefit. The Departments estimate approximately 800,000 of those individuals are currently uninsured. Employees will want to make sure they enroll in the proper plan to participate in this new benefit.
What is Minimum Essential Coverage?
Minimum Essential Coverage (MEC) is a term that came from the Affordable Care Act (also known as Obamacare). Prior to 2019, individuals were required to purchase a health plan that met MEC standards or pay a tax penalty. While the tax penalty has been lifted nationally (some states still have a state penalty), the law has not gone away and individuals are still required to enroll in qualified health plans.
There are several requirements for a plan to be considered MEC including coverage of the 10 essential health benefits (such as preventative and wellness services, immunizations, maternity, mental health, etc.) and limits on cost sharing (copays, deductibles, and out of pocket maximum).
What type of insurance does ICHRA require?
The Individual Coverage HRA requires employees and their dependents to be enrolled in individual health insurance (or Medicare) for each month the employee and their family members are reimbursed through ICHRA. This can be individual health insurance offered on or off the Exchange. The plans employees choose 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 MEC compliant plan called a qualified health plan.
There are two questions every individual needs to ask when securing insurance for ICHRA:
- Is it Individual Coverage? - Can anyone enroll in this plan or are there participation requirements (employment, union, faith requirements)?
- Is it MEC? Does it cover preventative health at no cost and offer no annual limits to coverage?
For those that like charts: A closer look at which plans work with ICHRA
|Bronze, Silver, and Gold Marketplace plans||Plans consisting soley of excepted benefits (vision, dental, indemnity, etc)|
|Medicare (Part A+B, or Part C)||Short-term|
|Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)||Group health plans secured through spouse’s employer|
|Student Health Insurance||Health Care Sharing Ministries|
|Association Health Plans and Multiple Employer Welfare Arrangements|
Will it be difficult to purchase an ICHRA qualified plan?
The good news is, securing the right type of plan to participate in ICHRA will not be difficult. Employees offered the Individual Coverage HRA will 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).
Do Sharing Minsitries qualify?
Unfortunately, the new regulations very clearly state that sharing ministries do not qualify for participation in ICHRA.
Do Preventative MEC plans qualify?
Preventative MEC plans do not qualify for ICHRA participation because these plans do not cover 100% of preventative health care, and they typically have annual limits on the dollar amount of coverage. This makes these plans non-compliant with the ACA and therefore do not qualify for ICHRA.
Next Steps: Finding Insurance
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. In addition, we have some great resources individuals may want to read before they get started, incuding “How to shop for an ICHRA compliant plan” or “ICHRA and Medicare.”
I wrote this blog because I love helping people decode confusing insurance jargon and understand the fine print. I'm a licensed health insurance professional and specialize in simplifying health insurance for individuals and small businesses. My QSEHRA articles have been featured regularly on Accounting Today, Accounting Web, HRWeb, and other industry publications. I'm also a member of Take Command Health's client success team and a full-time mom. Learn more about me and connect with me on our about us page. Thanks!