Top 10 ICHRA FAQs

Health insurance plans can be very complicated and complex. Even basic, run-of-the-mill plans can be hard for employees to understand. 

When a different type of plan is introduced, this can cause even more confusion. Such is the case with Individual Coverage Health Reimbursement Arrangements, or ICHRA plans.  

These plans are gaining in popularity because of the flexibility they provide both employers and employees, and the savings they can offer as well. Since they are relatively new to people, though, many have questions about what they are and how they work. 

Below, we answer the top 10 ICHRA FAQs to help shed some light on these plans. 

1. What are ICHRAs?

ICHRA plans are health benefits that are sponsored by employers, just like normal health insurance plans. They allow companies to reimburse employees for medical expenses that qualify under the plan, including the monthly premiums they pay. 

ICHRA plans allow employers to set a defined budget for employees, who can then use this budget to purchase health coverage on their own. This provides flexibility to employees, who can get more choice when it comes to their health coverage, and don’t have to change it if they don’t want if they switch jobs. 

2. What’s Different About ICHRAs?

One main difference with ICHRAs is that employees will use the allotted budget to purchase a health insurance plan on their own, instead of having to choose from a small list of pre-selected health plans the employer provides.  

Employees use the money the company allots to them to pay for any qualified medical expenses they may choose, including premiums. 

3. Can Unused ICHRA Funds Be Rolled Over?

In most cases, the answer is no. It’s a use-it-or-lose-it scenario. In other words, if the employee doesn’t use their full allotted budget, they cannot carry that amount over to the following year. Some ICHRA plans do allow this, though, so it’s best to check with your employer. 

4. What Health Plans Can Employees Choose?

A big benefit of ICHRAs is that employees can choose whatever health insurance plan meets their needs. The only requirement is that the health plan must meet the Affordable Care Act’s requirement for minimum essential coverage. 

5. What are the Benefits for Employers?

There are many benefits of ICHRA plans for employers. One is that it’s an affordable way to offer health insurance to even part-time and seasonal workers. ICHRAs allow companies to set up separate “classes” of employees, such as whether they are full- or part-time. Then, they can offer a different reimbursement amount to each employee class. 

6. Do All Employees Need to Be Offered an ICHRA?

No. This is another big advantage of ICHRAs.  

For instance, employers can offer all of their full-time employees traditional health insurance plans, and then offer part-time employees an ICHRA. The only restrictions are that you must offer the same ICRHA terms to everyone within a particular employee class. 

This can serve as a huge recruitment tool to companies that need to rely on a large number of part-time or even seasonal workers.  

7. What are the Financial Benefits to Employers?

There are a number of financial benefits to employers. For one, the money that the company contributes to ICHRA plans is tax-free. In addition, the company can control how much medical benefits cost them, since they can decide how much they want to contribute to each employee. 

8. Are ICHRAs in Compliance with All Laws?

Yes. ICHRAs are indeed fully compliant with all applicable laws. This means you don’t have to worry about whether you’re meeting any government mandates regarding providing health insurance coverage to your employees. 

9. Can All Companies Offer ICHRAs?

Yes. Every company can offer their employees an ICHRA plan, regardless of their size or type of business. There are no restrictions or limitations in this regard. 

10. Can Employees Still Enroll Through Health Insurance Exchanges?

Offering an ICHRA to your employees will not prevent them from taking advantage of health insurance plans offered on either state or federal health insurance exchanges. 

That being said, employees who enroll in a plan offered on an exchange usually won’t be eligible to receive an Advanced Premium Tax Credit, or APTC, since they are being reimbursed by the employer for part of the expenses. 

Discover the Benefits of ICHRAs with Beckham Ellis Insurance Group 

ICHRA plans are gaining in popularity, as employees and employers alike are searching for ways to cut costs on medical expenses and also find new ways to gain flexibility. These plans are also a great way for companies to cut back some of the red tape of plan administration and simplify the process. 

Are ICHRA plans right for your company? You can find out by partnering with the benefits professionals at Beckham Ellis Insurance Group. 

Our experts can walk you through the process and help you create an ICHRA plan that works for you and your employees. Contact us today to learn more.