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 allowance 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. Which option employers utilize will depend on their benefit strategy.