To set up an ICHRA, an employer must:

1. Determine which employees or classes will be eligible and set a budget for reimbursement amounts.
2. Decide on which expenses will be covered (premiums only or additional medical expenses).
3. Establish a formal plan document.
4. Notify employees and help them understand their options.
5. Ensure compliance with legal requirements, including affordability rules if applicable.

Any employee designated as eligible by the employer can participate in an ICHRA. However, to receive reimbursements, employees must be enrolled in an ACA-compliant individual health insurance plan at the metal level (Bronze, Silver, Gold, or Platinum) or be enrolled in Medicare, including applicable Medicare Part A, B, Part C (Medicare Advantage), and Part D . Employers can define different classes of employees (e.g., full-time, part-time, seasonal) and must apply ICHRA offerings consistently within each class.

Affordability is determined based on IRS guidelines. If an employer wants to meet affordability requirements, the monthly ICHRA reimbursement should ensure that the lowest-cost silver plan on the exchange does not exceed a certain percentage of an employee’s household income. Employers can use IRS safe harbor rules to estimate affordability.

Any employer can offer an ICHRA, and any employee who is eligible and enrolled in a qualified individual health insurance plan or Medicare can participate. ICHRA is an option for businesses of all sizes, from small startups to large enterprises.

Costs vary based on the employer’s chosen reimbursement amounts and administrative costs. There may be setup fees, administrative fees for third-party processing, and the reimbursement budget set by the employer. Additional compliance and reporting may be needed and could add to the cost.

Designing an ICHRA involves several key steps:

• Define Employee Eligibility Classes – Determine which employees will be eligible (e.g., full-time, part-time, seasonal, remote workers).
• Set Reimbursement Limits & Covered Expenses – Establish how much the employer will reimburse and whether it covers only premiums or includes additional medical expenses.
• Ensure Compliance & Reporting – Follow IRS, ACA, and ERISA guidelines, ensuring affordability if applicable.
• Create a Formal Plan Document – Outline plan details, reimbursement processes, and employee rights in a legally compliant document.
• Communicate the Plan to Employees – Provide clear instructions on how employees can participate, including how to submit proof of coverage and expenses.
• Partner with an HRA Administrator – Work with a third-party administrator or benefits consultant to streamline setup, compliance, and ongoing management.

• Determine employee eligibility classes
• Set a monthly reimbursement budget.
• Provide company legal information, including the legal business name, Employer Identification Number (EIN), and company contact information.
• Create formal plan documents, including a Master Plan Document, Summary Plan Description (SPD), Summary of Benefits and Coverage (SBC), and the required ICHRA Employee Notice.
• Please note that these documents must be in place before the benefit begins.

Please scroll to the top of this page to download the ICHRA pricing and Complete How To Guide for detailed pricing information.

Once your application is submitted, setup can take as little as a few days, depending on the complexity of the plan design. Employers need to establish employee classes, define reimbursement amounts, and ensure compliance with notification and documentation requirements. However, it’s also important to give employees adequate time to review their options and enroll in an individual health insurance plan that meets ICHRA requirements.