Union Orthotics and Prosthetics
"Facing a 40% renewal, our broker introduced us to the idea. Take Command provides the tools there for everybody to enroll in very easy formats on the platform."
In this guide, we'll cover how ICHRA and COBRA work together and what the requirements are for each.
Want to dive into the details of the individual coverage HRA?
Our ICHRA Guide will walk you through how ICHRAs work, ICHRA benefits, and ICHRA setup.
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Union Orthotics and Prosthetics
"Facing a 40% renewal, our broker introduced us to the idea. Take Command provides the tools there for everybody to enroll in very easy formats on the platform."
Taro Health
"To attract and maintain talent, we needed benefits. Managing our ICHRA has been simple and hands-off. I spend two hours a month managing and administering it."
StreamCare
"Take Command has made it simple to set up and administer the small business HRA for StreamCare and we highly recommend it to other small businesses."
If you’re navigating the complex landscape of health insurance, you may have heard of ICHRA (Individual Coverage Health Reimbursement Arrangement) and COBRA (Consolidated Omnibus Budget Reconciliation Act). Both of these programs can provide valuable healthcare benefits to employees and their families. You probably have some questions, like how do they work together? Is ICHRA subject to COBRA? How does ICHRA work with COBRA?
If you have an ICHRA through your employer but still need to use COBRA due to a qualifying event, such as job loss, it's important to understand the details of how these programs work in conjunction with each other. In this guide, we’ll explore everything you need to know about ICHRA and COBRA and how they interact to provide you with comprehensive healthcare coverage during times of transition and uncertainty.
We’ll cover the basics of each program, the eligibility requirements, and the rules for using each. Whether you’re an employee or an employer, you’ll find the information you need to make informed decisions about your healthcare coverage options.
Individual Coverage Health Reimbursement Arrangement (ICHRA) is a type of health reimbursement arrangement that allows employers to reimburse employees for the cost of individual health insurance policies. It was created in 2019 as a new healthcare option under federal law.
With ICHRA, employers can set aside a specific amount of money to reimburse their employees for the cost of individual health insurance policies purchased on the open market. This means that employees have more flexibility in choosing the health insurance plan that works best for their needs, and employers can provide a valuable benefit to their employees without having to manage a traditional group health insurance plan.
ICHRA is available to all employees, regardless of their employment status, and can be used to cover a wide range of healthcare expenses. However, it is important to note that employers must follow some eligibility requirements and rules to offer ICHRA to their employees.
Learn about ICHRA Rules
Here’s a quick breakdown of everything you need to know about ICHRA.
ICHRA allows employers to reimburse employees for the cost of individual health insurance policies purchased on the open market. Here's how it works:
Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law in the United States that was enacted in 1986. It gives employees and their families the option to continue their employer-sponsored health insurance coverage for a limited period of time after certain qualifying events, such as job loss, reduction in work hours, divorce, or death of the employee.
The law applies to employers with 20 or more employees, and it provides important protections and benefits for workers and their families during times of transition.
Here’s a quick breakdown of everything you need to know about COBRA basics.
What must the employer offer covered employees and covered spouses/dependents:
If you have ICHRA through your employer but still need to use COBRA due to a qualifying event, such as job loss or reduction in work hours, there are some important things to remember.
First, it is important to understand that you can’t use both ICHRA and COBRA simultaneously. If you elect COBRA, you will no longer be eligible for reimbursement through your ICHRA.
Second, you must notify your employer or ICHRA administrator of your COBRA election and the reason for the qualifying event. This will allow them to terminate your ICHRA coverage and provide you with information on how to enroll in COBRA.
Finally, it is important to remember that COBRA coverage is temporary and may only last for a limited period of time. It is important to explore other health insurance options, such as individual health insurance policies, as soon as possible to ensure that you have continuous coverage.
Here’s a quick breakdown of everything you need to know about ICHRA and COBRA basics.
If you terminate an employee, you are no longer required to offer them ICHRA benefits. This means you don’t have to continue contributing funds to their ICHRA account. However, any funds that have already been contributed to their account and are available for reimbursement of health care expenses can still be used by the employee.
It's important to note that employees must be notified of any changes to their ICHRA benefits, including termination of coverage, in a timely manner. Additionally, employers must comply with all applicable regulations and guidelines regarding ICHRA and should consult with their ICHRA administrator or legal counsel to ensure that they are in compliance with all requirements.
We want to highlight that we’ve never seen a situation where an employee elected COBRA over their ICHRA coverage while still remaining an employee.
ICHRA is a robust benefit that has the opportunity to help over 800,000 employers, with many nuances that are easy to blunder when it comes to calculating affordability, managing ERISA and COBRA requirements, and ensuring employees have a qualified plan to participate. That’s why finding an ICHRA administrator you know and trust is important. A good ICHRA administrator has their pulse on the regulations as updates are made.
Will ICHRA help you save on benefits?
In about half the country, individual insurance rates are cheaper than their group plan equivalents, meaning health benefits dollars will stretch further with ICHRA. Use our heat map to see if your location is prime for saving.
Ready to Get Started?
Begin designing your ICHRA plan today and be set up in minutes. You could start reimbursing your employees tax-free sooner than you think.
Ready to get started?
Begin designing your ICHRA plan today and be set up in minutes. You could start reimbursing your employees tax-free sooner than you think.
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