For years, companies had been able to leverage HRAs to reimburse their employees’ healthcare expenses. The Affordable Care Act (ACA), specifically IRS Notice 2013-54, limited a business’s ability to offer HRAs to their employees for individual policies. Although the qualified small employer HRA (QSEHRA) helped some small businesses, there were still many restrictions and roadblocks to leveraging HRAs for employees.
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 beginning on January 1, 2020.
In simplest terms, ICHRA will allow businesses the alternative to offer employees a monthly allowance of tax-free money. It allows them to buy individual health coverage tailored to fit their unique needs, control costs, and address ACA compliance for applicable large employers.