Individual Coverage Health Reimbursement Arrangement

ICHRA pros and cons

ICHRA plans come with their own set of pros and cons that businesses should consider before implementation:

Pros:

• Cost control: Employers can set a fixed, tax-free monthly allowance for employees, helping to manage and predict healthcare expenses.
• Flexibility: Employees have the freedom to choose individual health insurance policies that best suit their needs and preferences.
• Simplified administration: ICHRA providers like Take Command streamline the setup and management process, reducing administrative burdens on businesses.
• Tax benefits: Both employers and employees can enjoy tax advantages associated with ICHRA plans.
• Scalable: ICHRAs are suitable for businesses of any size and can grow as the company expands.
  
  

Cons:

• Limited group plan options: ICHRA implementation means employees cannot participate in a traditional group health insurance plan.
• Risk of inadequate coverage: Employees may choose plans with lower premiums, potentially resulting in insufficient coverage for their healthcare needs.
• Complex regulations: Businesses must navigate and comply with ICHRA-related regulations, such as ensuring employees' purchased plans meet the minimum essential coverage requirements.
• Employee education: The process of selecting and managing individual health insurance policies may be confusing or overwhelming for some employees - be sure to partner with an ICHRA administrator that has in-house, hands-on enrollment support (like Take Command!).

Check out this blog for more information. 

ICHRA provider

An ICHRA provider, like Take Command, is a company that helps other businesses manage healthcare benefits for their employees through something called an ICHRA plan. The employer gives their workers a certain amount of tax-free money each month to buy their own health insurance on the open market. When a business teams up with Take Command, they make setting up this ICHRA thing a piece of cake, taking care of all the legal stuff and making sure employees have an easy time picking and managing their policies. This way, the company can keep their healthcare expenses in check and employees can choose the plan that works best for them. All about ICHRA providers. 

ICHRA rules

• There are several rules that employers must follow when establishing and administering an ICHRA. Some of the key rules include:
• Eligibility: Employers must offer the ICHRA to all employees who meet certain eligibility requirements, such as working a minimum number of hours per week.
• Allowance amount: Employers must set a monthly allowance amount for each employee that is fair and reasonable.
• Reimbursement: Employees must submit documentation of their eligible expenses in order to be reimbursed from the ICHRA.
• Discrimination: Employers cannot discriminate in favor of highly compensated employees when offering an ICHRA.

ICHRA vs group plan

One of the main differences between an ICHRA and a traditional group health insurance plan is that with an ICHRA, employees can choose their health insurance plan. This can be an advantage for employees who prefer more flexibility and control over their healthcare.

However, it can also mean that employees may have fewer options for healthcare providers and services than they would with a traditional group plan. Check out this blog for more information. 

ICHRA vs QSEHRA

ICHRA and QSEHRA are two distinct healthcare reimbursement arrangements that offer unique features and benefits to employers and employees, each catering to different business needs and structures. Check out this blog for more information. 

Here's a comparison chart to help illustrate the key differences between ICHRA and QSEHRA:

How to set up an ICHRA

• To set up an ICHRA, employers must follow several steps, including:
• Determine eligibility requirements for employees.
• Set a monthly allowance amount for each employee.
• Establish a written plan document outlining the plan's terms and conditions.
• Choose an ICHRA administrator.
• Communicate the plan to employees and provide them with guidance on how to use the ICHRA.

Health reimbursement arrangement rules

In addition to the specific rules governing ICHRAs, general rules apply to all HRAs. Some of the key rules include:

• Eligibility: HRAs must be offered to all eligible employees on a nondiscriminatory basis.
• Reimbursement: Employees must submit documentation of their eligible expenses to be reimbursed from the HRA.
• Annual limits: HRAs must have an annual limit on the amount of reimbursements that can be made to employees.
• Portability: HRAs are not portable, meaning that any unused funds in the account revert to the employer if the employee leaves their job.

IRS rules for health insurance reimbursement

It's important to note that the IRS has specific rules governing employer reimbursement for health insurance premiums. Before the creation of ICHRAs, employers were prohibited from reimbursing employees for their health insurance premiums. However, the creation of ICHRAs allows employers to provide this type of reimbursement in a tax-advantaged way.

Health insurance reimbursement taxable IRS

It's also important to note that any reimbursements made through an HRA, including ICHRAs, are tax-free for employees. However, any unused funds in an HRA at the end of the plan year typically revert back to the employer and are considered taxable income.

Health reimbursement account eligible expenses

Eligible expenses for an HRA, including an ICHRA, include a wide range of medical expenses that are not covered by insurance. These expenses may include:

• Deductibles, copayments, and coinsurance
• Prescription drugs
• Vision and dental expenses
• Mental health services
• Chiropractic services
• Acupuncture
• Medical equipment and supplies
• Home healthcare
• HRA eligible expenses 2023

Eligible expenses for an HRA are subject to change each year. As of 2021, the eligible expenses for QSEHRAs and ICHRAs are the same. However, the eligible expenses may change in the future.

HRA eligible expenses over the counter

It's important to note that as of January 1, 2020, HRAs can be used to reimburse the cost of over-the-counter (OTC) medications without a prescription. This change was made as part of the CARES Act.

The complete ICHRA eligible expenses list.