Key Considerations for Setting Up and Managing an ICHRA
The Individual Coverage Health Reimbursement Arrangement (ICHRA) provides employers with a flexible option to reimburse employees for health insurance premiums and eligible medical expenses. Below are essential considerations and guidelines for setting up and managing an ICHRA effectively.
Can Employers Exclude Themselves or Certain Participants from an ICHRA?
Yes. Employers can configure an ICHRA to exclude themselves or certain participants from eligibility. This exclusion can be adjusted during the setup process. If the platform setup flow doesn't provide this option initially, eligibility settings can be manually updated to ensure the desired participants are excluded before any payment is processed. This excludes any charges associated with those participants being part of the ICHRA.
Customizing Allowances for Employee Classes and Ages
Employers can vary ICHRA allowances based on employee classes, such as full-time and part-time employees. Within each class, all employees must receive the same maximum allowance structure. However, allowances can be varied by age, adhering to a 3:1 age ratio limit permitted under ICHRA rules. For example, older employees may receive higher allowances in compliance with these guidelines.
Combining Group Health Plans and ICHRA Coverage
An ICHRA allows employers to provide different types of health coverage to different employee classes (e.g., offering a group health plan to full-time employees and an HRA to part-time employees). Compliance requires that employees eligible for a group health plan cannot simultaneously receive ICHRA reimbursements. Defining specific employee classes ensures regulatory adherence and tailored coverage options for diverse workforce needs.
Managing Employee Participation in ICHRA
Employers have the flexibility to manage which employees can participate in an ICHRA and to transition employees in or out as needed. To remove an employee, simply access the employer portal, update their profile to include a separation date, and their account will be placed in suspended status. Employees then have 90 days to submit outstanding claims before their account becomes inactive. This streamlined process ensures compliance while providing flexibility for employee transitions.
Steps for a Smooth Setup Process
Configure eligibility settings, ensuring that excluded participants (e.g., employers) are accurately reflected.
Define allowances that align with regulatory limits and organizational policies, considering factors like employee class and age.
Evaluate group health plan offerings alongside ICHRAs to ensure compliance when coverage options differ across employee groups.
Use the employer portal to track and manage employee participation, including additions, removals, and account updates.
By following these considerations, employers can effectively implement and manage an ICHRA while staying compliant with regulations, offering tailored benefits, and maintaining administrative efficiency.
Related Topics: