What to look for in an ICHRA Administrator
In 2020, the U.S. Government gave employers the option to offer an ICHRA, Individual Coverage Health Reimbursement Arrangement, instead of offering a traditional job-based health plan. This type of HRA is a great alternative for employers looking to save on premium costs and give their employees a choice over the type of coverage they want.
An ICHRA allows the employee to purchase their own individual or family health insurance on the exchange and be reimbursed for the monthly premium. With this model comes a new way to process healthcare coverage meaning you will need an experienced company to administer the ICHRA.
What is an ICHRA Administrator?
First, you’ll want to understand what an ICHRA administrator is and what they do. An ICHRA administrator is a professional who helps businesses set up and manage their Health Reimbursement Arrangements (HRAs). They can be a valuable partner in helping your business establish and maintain a compliant HRA. An administrator is versed in the knowledge needed to bring an ICHRA to your employees.
The Role of an ICHRA Administrator
Setting up an ICHRA isn’t too difficult but there are rules and regulations that need to be followed. An ICHRA administrator is responsible for seeing the process and implementation by taking the following steps:
1. Assist with the setup of the ICHRA. The administrator assists with designing the plan and determining eligible employees. They also help with determining budgets and setting up legal documents.
2. Helping employees enroll in the ICHRA. Change management is key to a successful ICHRA launch. A plan administrator will assist with communicating the new plan and assisting with employees' enrollment on the exchange.
3. Processing reimbursements. To process reimbursements, employees need to provide proof of qualified medical expenses including individual insurance premiums.
4. Managing changes to the ICHRA rules and regulations. Healthcare policy continues to change and evolve. The job of an administrator is to stay up to date on the latest rules and regulations so employers don’t get slapped with a fine.
5. Answering employee questions. Beyond the initial sign-up process, employees will continue to have questions regarding reimbursements. An administrator can facilitate questions and answers while maintaining the employee’s privacy.
Why Work With an ICHRA Administrator?
Some employers may be tempted to administer the ICHRA themselves. While it’s possible, Take Command recommends not going that route. There are a few practical reasons.
- Expertise: An experienced ICHRA administrator will have a deep understanding of the rules and regulations surrounding HRAs, which can help ensure compliance and avoid costly mistakes. Knowing that your ICHRA is being managed by a professional can give you peace of mind and free up your time to focus on other aspects of your business.
- Record Keeping: The IRS requires businesses to keep records for up to 7 years. An administrator keeps digital records organized and safe.
- Employee Privacy: As we mentioned earlier, employee privacy needs to be considered when implementing an ICHRA. To qualify for reimbursements, employees need to submit receipts for healthcare. These are considered Protected Health Information (PHI) and under the Health Insurance Portability and Accountability Act of 1996 (HIPPA), employers asking for employee medical records is a HIPAA privacy violation.
How to Choose the Right ICHRA Administrator for Your Company?
Since ICHRAs have only been around a few years, it may be difficult to find an experienced administrator. Many insurance brokers and businesses are just becoming familiar with them. That’s why we recommend finding an administrator who is knowledgeable about Health Reimbursement Arrangements. This will ensure no regulations or processes get missed.
Second, find an administrator who is willing to work with your specific needs. Each business has a unique set of needs and problems to solve and a qualified ICHRA administrator can help you navigate any issues.
Finally, make sure the administrator has a reputable reputation and track record with other clients.
