ICHRA stands for “Individual Coverage Health Reimbursement Arrangement” and is a modern approach to employer-sponsored health benefits. It enables employers of all sizes to reimburse their employees tax-free for health insurance premiums and medical expenses, providing employees with flexibility in choosing their health coverage. Employees typically purchase their own individual health insurance policies through the marketplace and submit proof of coverage for reimbursement.
ICHRA is an employer-funded HRA that reimburses employees for medical premiums and expenses. Employees purchase their individual insurance premiums and/or medical expenses (depending on how the employer designs the ICHRA) and then submit receipts for reimbursement from the employer. The employer establishes the reimbursement allowances per employee. Employees participating in an ICHRA must ensure their health plans are ACA-compliant and submit proof of coverage or premium payments for verification. Once approved, the employer reimburses the employee up to the allowed monthly allowance, ensuring compliance with IRS and ICHRA regulations.
For a more in-depth explanation of the new HRA, read our in-depth ICHRA Guide. Additionally, Take Command simplifies the administration of ICHRAs by helping employees identify and enroll in qualified individual health insurance plans that meet IRS and ICHRA eligibility requirements. The platform also ensures compliance by verifying submitted plans and aligning reimbursements with regulatory guidelines.