The Most Significant Change to Health Care Benefits in Decades is Here
For thousands of employers, offering health benefits to their employees has felt out of reach. That all changes in January 2020, when the Individual Coverage Health Reimbursement Arrangement (ICHRA) becomes available to businesses and organizations of all sizes.
In simplest terms, ICHRA is a federal ruling which allows businesses the option to offer employees a monthly allowance of tax-free money to buy health insurance that fits their unique needs. Along with provisions for out of pocket health insurance expenses, ICHRA also directly addresses ACA compliance for employers with more than 50 employees.
ICHRA – Transforming how businesses provide health care benefits to their employees.
How ICHRA Works
Once an employee’s insurance premium or out-of-pocket expenses are approved, the business reimburses them up to their allowance amount. It’s that simple, and can satisfy all ACA mandates for large businesses.
For years, HRAs had been a popular solution for businesses who wanted to reimburse their employees’ healthcare expenses. The Affordable Care Act (ACA) changed that, significantly limiting a business’s ability to offer HRAs for individual policies.
In 2017, an Executive Order was issued directing the Departments of Treasury, Health and Human Services, and Labor to expand business’ use of HRAs once again. In June of 2019, new rules were released, establishing ICHRA as an option for 2020.
ICHRA Is Different Than An HRA
ICHRA is different than a traditional HRA for two reasons. First, an ICHRA can reimburse individual insurance premiums, whereas an HRA cannot. Second, an ICHRA works with individual insurance plans, while an HRA can only be used with a group health plan.