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ICHRA: What are the minimum and maximum amounts you can contribute to employees

This article is for employers using Take Command who want to understand how much they can contribute to employees through an Individual Coverage HRA (ICHRA).

Written by Support

There are no federal minimum or maximum contribution limits for an ICHRA. Employers can set any reimbursement amount they choose, as long as employees within the same class receive the same terms and the plan follows ACA and IRS rules.

Is there a minimum contribution requirement?

No. ICHRA does not require employers to offer a minimum reimbursement amount.

Employers may:

  • Offer a small monthly allowance

  • Offer a partial premium reimbursement

  • Offer a full premium reimbursement

However, if an employer is subject to ACA employer mandate rules, the contribution may need to be sufficient for affordability purposes.

Is there a maximum contribution limit?

No. There is no federal cap on how much an employer can contribute to an ICHRA.

Employers may choose to:

  • Cover a portion of premiums

  • Cover the full cost of individual health insurance

  • Provide different allowance levels across employee classes

The only requirement is that the arrangement remains compliant with IRS and ACA rules.

How do contribution limits work within employee classes?

While there are no overall limits, contributions must follow class rules.

Within a single employee class:

  • All employees must be offered the same allowance structure

  • Differences are only allowed for:

    • Age (within permitted ratios)

    • Family size (based on coverage tier)

Employers cannot vary contributions based on:

  • Health status

  • Job performance

  • Individual negotiations

  • Claims history

Can employers offer different amounts to different employee groups?

Yes. Employers can vary contribution amounts by using approved ICHRA employee classes such as:

  • Full-time employees

  • Part-time employees

  • Seasonal employees

  • Salaried vs hourly employees

  • Employees in different geographic locations

  • Waiting period employees

Each class may have a different allowance amount.

Are there any indirect limits employers should know about?

Yes. Even though there are no federal caps, employers may still be affected by:

ACA affordability rules (for large employers)

If the employer is an Applicable Large Employer (ALE):

  • The ICHRA must be affordable for the employee

  • Affordability is based on the lowest-cost Silver plan minus the ICHRA contribution

  • If unaffordable, the employer may face penalties and employees may qualify for premium tax credits

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