Employees enrolled in Medicaid are not eligible to participate in an ICHRA because Medicaid is not considered qualifying individual health insurance coverage under ICHRA rules.
Is Medicaid eligible for ICHRA participation?
No, Medicaid does not qualify as eligible coverage
Employees cannot use Medicaid as their qualifying health insurance under an ICHRA.
To participate in an ICHRA, employees must be enrolled in:
An individual ACA-compliant health insurance plan (on or off the Marketplace), or
Medicare (Parts A and B, or Part C)
Medicaid does not meet the requirements for qualifying coverage.
Why Medicaid is not eligible
ICHRA requires individual commercial health insurance or Medicare
ICHRA rules require employees to be enrolled in individual health insurance that meets Minimum Essential Coverage standards and ACA compliance requirements.
Medicaid is excluded because:
It is a government-sponsored public health program
It does not function as individual commercial insurance coverage
It does not meet the ICHRA definition of qualifying individual insurance
Because of this, Medicaid cannot be used for reimbursement eligibility under an ICHRA.
What happens if an employee has Medicaid?
Employees with Medicaid cannot participate in the ICHRA benefit
If an employee is enrolled in Medicaid:
They are not eligible to receive ICHRA reimbursements
Their coverage does not satisfy ICHRA participation requirements
They would need to enroll in qualifying individual coverage to participate
In most cases, employees with Medicaid will need to choose between:
Remaining on Medicaid (no ICHRA participation), or
Enrolling in a qualifying individual health plan (to use ICHRA funds)
What coverage qualifies instead of Medicaid?
Eligible alternatives must be individual health insurance or Medicare
To participate in an ICHRA, employees must have one of the following:
1. Individual ACA-compliant plans
Marketplace (on-exchange) plans
Private off-exchange major medical plans
Bronze, Silver, Gold, or Platinum plans
2. Medicare
Medicare Part A + Part B, or
Medicare Part C (Medicare Advantage)
3. Other qualifying individual coverage
Certain catastrophic plans (if eligible by age or exemption)
Student health insurance (if qualifying)
What is NOT eligible for ICHRA participation
These coverage types cannot be used with an ICHRA
Employees enrolled in any of the following are not eligible:
Medicaid
TRICARE
COBRA
Spouse’s employer-sponsored group health plan
Short-term health insurance
Health care sharing ministries
Indemnity or limited benefit plans
If an employee is covered only by one of these plans, they cannot use ICHRA funds.