What are the classes and how do they work?
Employee classes are part of the flexibility of ICHRA. Employers can design unique benefit solutions to fit their workforce so they have more freedom to design a plan that best suits their needs.
To take it a step further, employers can also mix-and-match traditional group plans with ICHRA implementations. For example, you could offer employees in Colorado a traditional group plan and employees in New York an ICHRA.
However, employee classes have to be based on legitimate job-based criteria like hours worked or geographic location. They cannot be used to discriminate against unhealthy employees (i.e., you can’t create a “diabetic” class, etc).
What are the classes I can use to design my plan?
The allowable ICHRA classes are as follows:
- Full-time employees
- Part-time employees
- Seasonal employees
- Employees covered under a collective bargaining agreement
- Employees in a waiting period
- Foreign employees who work abroad
- Employees working in the same geographic location (same insurance rating area, state, or multi-state region)
- Salaried workers
- Non-Salaried workers (such as hourly workers)
- Temporary employees of staffing firms
- A combination of two or more of the above
The amounts offered to employees can be varied within each class based on either age or number of dependents.
ICHRA will also feature a new hire provision which allows employers to offer new employees an Individual Coverage HRA while grandfathering existing employees in a traditional group health plan. Read more about the new hire provision on our blog here.
Are there minimum class sizes?
Yes, but only if you plan to offer a traditional group health plan to at least one class of employees and an Individual Coverage HRA (ICHRA) to another class of employees. In this case, you will need to keep in mind the minimum class size requirements. These requirements were put in place to prevent the individual market from being saturated with high risk individuals.
Minimum class size requirements apply to the following classes:
- Salaried Employees
- Non-Salaried Employees
- Full-time Employees
- Part-time Employees
- Employees in the same geographic rating area (smaller than state level)
The minimum number of employees to be included in a class ultimately depends on the size of the employer based off the employee count on the first day of the plan year.