ICHRA

• ICHRAs are a new approach to employer-sponsored health benefits
• Rather than a group insurance plan, each employee chooses their own insurance, subsidized by a pre-tax employer contribution
• ICHRA stands for Individual Coverage Health Reimbursement Arrangement 

ICHRAs are for Employers Who:

• Have unaffordable coverage or unsustainable increases to their health insurance premiums
• Have a diverse workforce with different healthcare needs
• Want to offer health benefits/more choice to attract talent
• Have workers in multiple states without a single-carrier solution
• No longer wish to manage health risk among their workforce

• Group insurance can be prohibitively expensive for some businesses and/or bring unsustainable increases in premiums each year
• Group insurance forces employees to pick from a limited selection of plans that might not fit their needs — especially in diverse workforces
• ICHRAs change that by making health coverage expenses more predictable (and in many cases more affordable), and by making health plans personalized for each employee’s needs
• As a group insurance alternative, ICHRA benefits mean flexible and affordable health coverage for employers and employees

Because they’re a new form of insurance, most people wonder about how to set up an ICHRA. The ICHRA administration process is actually fairly straightforward. 

How it works:

1. Select a Benefits Platform  — Benefits platforms act as an administrator, coordinating transactions, providing decision support to employees, and serving as a place to enroll.
2. Define Your Contribution — Set your overall budget and the pre-tax contribution you’ll make to each eligible employee class.
3. Employees Shop Marketplace Plans & Enroll — Employees shop plans based on their own unique needs and enroll through your chosen benefits platform.
4. Employees Get Reimbursed — Employees are reimbursed for health coverage based on employer-defined contributions.

ICHRAs, as described in the 2019 Final Rule (2019-12571, 84 FR 28888) and its attendant federal, state, and local laws and regulations.