Open enrollment for health benefits is fast approaching, and with some decisions still up in the air, the Individual Coverage HRA (ICHRA) is a great option employers of all sizes should consider. However, employees have lots of HRA questions about this type of benefits plan, which allows employers to set a tax-free budget for employees to purchase their own healthcare coverage.
As experts in the healthcare industry, Flyte fields dozens of HRA questions weekly from employers and employees. Here, we answer five of the most common questions we receive regarding ICHRA.
Top 5 HRA Questions Answered
- What is an ICHRA?
An ICHRA is a benefits plan that allows employees to purchase qualifying medical insurance. Your employer will then reimburse up to a set dollar amount for the insurance, and possibly out-of-pocket medical expenses. The best part is that it is all tax-free.
- Who is responsible for making sure my monthly premium is paid?
Ultimately, it is the employee’s responsibility to ensure their insurance carrier is paid every month because it is their policy. Regardless of whether they are getting a reimbursement or the carrier is being paid directly by an administrator, employees should always check to make sure their insurance is paid.
- What plans can be reimbursed under ICHRA?
To be eligible to participate, employees must be enrolled in a Qualified Health Plan such as:
– Individual medical plans purchased on or off the exchange (Bronze, Silver, and Gold) without a premium tax credit.
– Catastrophic Plans (limited to under age 30 or qualify for a hardship exemption)
– Medicare Part A + B or Part C
– Student Health Insurance
- What kind of documentation is needed to be reimbursed for my premium?
Employees need to provide a carrier’s invoice. Payment receipts will not be sufficient documentation. The IRS requirement for documentation must show:
– Carrier name
– Enrolled member’s name
– Billing period
– Amount carrier is billing for coverage
- What plans cannot be reimbursed by an ICHRA?
The following plans are not eligible for reimbursement:
– Health Care Sharing Ministries
– Group plans of any kind, including a spouse’s plan or COBRA from a previous employer
– Excepted Benefits Coverage only (vision, dental, etc.) These plans are only eligible for reimbursement in an ICHRA when paired with an eligible individual medical insurance plan.
– Association Health Plans
– Short-Term Limited Duration Insurance
– Fixed Indemnity Plans
– MEWAs – Multiple Employer Welfare Arrangements
Still Have HRA Questions?
It’s essential to make informed decisions regarding health benefits for employees as open enrollment approaches. ICHRA can be an excellent option for both employees and employers. If you have any further questions or concerns about ICHRA or benefits plans in general, please contact us. We are always here to help.