In most cases, an Individual Coverage HRA (ICHRA) is considered a group health plan and is subject to both COBRA and ERISA requirements.
Is ICHRA subject to COBRA?
Generally, yes.
Because an ICHRA is a group health plan, employers that are subject to COBRA must offer continuation coverage when a qualified beneficiary loses access to the ICHRA due to a qualifying event.
Common qualifying events include:
Termination of employment
Reduction in hours
Divorce or legal separation
Death of the employee
A dependent child losing eligibility
COBRA generally applies to employers with 20 or more employees, although specific rules and exceptions may apply.
Is ICHRA subject to ERISA?
Generally, yes.
An ICHRA is typically considered an employee welfare benefit plan under ERISA.
As a result, employers sponsoring an ICHRA are generally required to comply with ERISA requirements, including:
Maintaining plan documents
Providing required participant notices
Operating the plan according to ERISA standards
Fulfilling applicable fiduciary and reporting obligations
Are there any exceptions?
Certain employers may not be subject to all COBRA or ERISA requirements.
Examples can include:
Governmental employers
Certain church plans
Employers exempt from applicable COBRA requirements under federal law
Employers should consult legal or benefits professionals regarding their specific obligations.
What does this mean for employers offering an ICHRA?
Employers sponsoring an ICHRA should ensure they have:
Compliant plan documents
Required employee notices
Processes for handling COBRA continuation coverage when applicable
Procedures for ongoing ERISA compliance
Many employers work with benefits administrators or legal counsel to help satisfy these requirements.
Key takeaway
In most cases, an ICHRA is subject to both COBRA and ERISA because it is considered a group health plan. Employers should ensure they understand and comply with applicable continuation coverage, notice, documentation, and plan administration requirements.