Employers can design an ICHRA that reimburses only health insurance premiums and excludes out-of-pocket medical expenses, as long as the plan document is structured that way and applied consistently.
Can an ICHRA reimburse only premiums?
Yes, premium-only ICHRA designs are allowed
Employers may structure an ICHRA so that employees are reimbursed for:
Monthly health insurance premiums only
And not reimbursed for other medical expenses
This is a valid design choice under ICHRA rules as long as it is clearly defined in the plan.
What counts as “premiums only” reimbursement?
Premium-only ICHRA typically includes:
Eligible reimbursements:
Individual ACA marketplace plan premiums
Private individual health insurance premiums
Medicare Part A, B, C, D premiums (if applicable and eligible)
Individual dental and vision premiums (if included in plan design)
Not included:
Doctor visits
Prescription costs
Copays and deductibles
Any other out-of-pocket medical expenses
How employers define premium-only ICHRA
The reimbursement scope is set in the plan design
To limit reimbursements to premiums only:
The employer defines eligible expenses in the ICHRA plan document
Only premium expenses are marked as reimbursable
Employees are instructed to submit only premium documentation
The system enforces reimbursement rules based on plan configuration
Once set, the reimbursement rules apply consistently to all eligible employees in that class.
What is NOT allowed in a premium-only ICHRA
Medical expenses cannot be reimbursed unless explicitly included
If the ICHRA is set to premiums only, the following are NOT reimbursable:
Doctor visits
Hospital bills
Prescription drug copays
Lab work
Deductibles or coinsurance
Dental or vision services (unless premium-only and included separately)
Why employers choose premium-only designs
Simpler administration and predictable costs
Common reasons include:
Easier budgeting (fixed monthly premiums only)
Reduced claim complexity
Lower administrative burden
Focus on ensuring insurance coverage rather than all medical expenses
Important compliance rule
You cannot reimburse outside the defined plan structure
ICHRA reimbursements must strictly follow plan terms:
If the plan is premium-only → medical expenses are not eligible
If the plan includes medical expenses → those must be explicitly allowed in plan documents
Reimbursing outside the defined scope would violate plan compliance rules.