Frequently Asked Questions

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

ICHRAs make:

• Costs Predictable — thanks to a much larger risk pool and stable employer contributions.
• Plans Personal — because employees can buy any plan that fits their needs from any carrier on the marketplace.
• Coverage Possible — because with better-controlled costs and less hands-on administration, offering coverage is possible for many more businesses.

• ICHRAs have several key benefits: cost predictability, personalized employee health plans, more access to coverage for small businesses, plan portability if employees leave, and ACA compliance.                     
• Like any adjustment to health insurance, ICHRAs require some initial effort to investigate and set up, and require communication with employees in order to explain the change in coverage. That said, ICHRAs require less hands-on administration than group plans once they’ve been set up. This is because benefit platforms handle the administration work instead of employers.   

• Employers Select a Benefits Platform  — Benefits platforms act as an administrator, coordinating transactions, providing decision support to employees, and serving as a place to enroll.
• Employers Define Their Contribution — Employers set an overall budget and the pre-tax contribution for healthcare coverage.
• Employees Shop Marketplace Plans & Enroll — Employees shop plans based on their own unique needs and enroll through your chosen benefits platform.
• Employees Get Reimbursed — Employees are reimbursed for health coverage based on employer-defined contributions

Yes. Carriers and plan options vary by market, but many of the insurance brands your employees are familiar with offer ICHRA-compatible plans. And if the same plan is unavailable, odds are that a similar plan is available.

Yes. If you think about all the complicated choices people make each day as  consumers (like buying a TV or auto insurance) it’s something people navigate all the time in their personal lives. What employees need most is decision support to understand which health plan options are best for them. ICHRA benefit administrators have tools and services to help guide employees, including showing them plans that are similar to what they currently have.

ICHRAs empower employees to choose health plans that are the best fit for them. The employee can now take ownership of their healthcare while still receiving support and education from their employer. Action is required from both parties, and both parties are able to enjoy the benefits that an ICHRA provides.

• Once established, an ICHRA requires less hands-on administration than group health insurance. That’s because with an ICHRA, employers no longer shop for health plans or manage benefits.
• Every aspect of an ICHRA is administered through a benefits platform of your choosing, so once you’ve picked a platform and defined your pre-tax contribution, the majority of your administration is limited to occasional maintenance and selections.
• The time saved allows you to focus on business instead of managing benefits.

• Benefits platforms are the key to many aspects of ICHRAs, so you want to pick a platform that will support your needs and work with your budget
• Solutions tend to be service-led, technology-led, or a combination of the two
• Tech-led solutions provide all the tools but require the user to do much of the lifting
• Service-led platforms offer more of a white glove service, but likely come with higher fees
• Contact an Ambetter ICHRA expert to explore options and considerations

Like any change to health insurance, changing to an ICHRA requires some upfront effort and can also prompt questions from employees. Your benefits administrator can provide answers that make change management easier and help employees understand why an ICHRA is the right choice. Please also keep in mind that you may have requirements to provide notice to employees.

Yes. In a recent industry survey, 94% of people were similarly satisfied or more satisfied with their insurance after moving to an ICHRA.

source: Deft Research - 2024 Commercial Group and ICHRA Study

• Yes. The way ICHRAs are applied has a lot of flexibility.
• All employees can be covered by an ICHRA.
• Some employees can be on an ICHRA and others on group insurance.
• Some employees can be on ICHRA and some can have no benefits.
• And all employees can be on ICHRA with varying contributions based on employee classes.
• Examples of employee classes include: 
  • full-time employees, 
  • part-time employees, 
  • seasonal employees, 
  • salaried workers, 
  • non-salaried workers, 
  • employees in a collective bargaining unit, 
  • employees in waiting period, 
  • foreign employees working abroad, 
  • employees in the same rating area, 
  • and temporary employees.

ICHRAs are a good fit for employers who:

• Have unaffordable coverage or unsustainable premium increases
• Have a diverse workforce with different healthcare needs
• Want to offer 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

• An ICHRA can reimburse individual insurance premiums while a traditional HRA cannot.
• A traditional HRA must be “integrated” with a group health plan, whereas an ICHRA works with individual insurance plans.

Yes, if an employer is providing premium-only contributions (vs. medical expense reimbursement) and employees select an HSA-compatible plan.

Yes. ICHRAs are the reimbursement mechanism for employees to purchase qualified health plans.

Because ICHRA is a reimbursement arrangement (and not an account), the employer simply keeps the dollars that were earmarked for reimbursement. Throughout the year, however, the employee’s unused allowances accrue, but if the employee never submits receipts for the full reimbursable amount, the employer keeps the funds. Employers have the option to either carry over the funds or reset them at the end of the year.

Fairly easy. Each month your benefit administrator platform will share how much you need to reimburse your employees. Many employers use this information to run reimbursements through their payroll software.

There are no minimum or maximum contribution limits for an ICHRA. Furthermore, employers can choose to offer different amounts to different groups of employees.

Yes. Employers may contribute pre-tax dollars to ICHRA for employees, who then apply the contributions toward Medicare and Medicare supplemental insurance costs.

In October 2017, President Trump issued an Executive Order asking the Departments of the Treasury, Health & Human Services, and Labor to expand the usability of HRAs. The new rules creating ICHRA were released in June 2019 and went into effect in January 2020.