ICHRA Information for Florida
How does ICHRA offer employees their choice in benefits AND save them money at the same time?
To sum it up, ICHRA allows both large and small businesses in the freedom to offer its employees a specific amount of tax-free money to be used towards the purchase of individual medical insurance. Along with the option to buy individual health coverage, employees may also be given the option to use that money towards out of pocket expenses. ICHRA provides freedom of choice for employees, controls cost for all parties and directly addresses ACA compliance for Applicable Large Employers.
Companies often use HRAs to reimburse their employees’ healthcare expenses associated with group insurance. This strategy is most often used to ward off increasing premium costs but with most employers seeing tremendous increases in premium a new tactic is needed.
The Affordable Care Act (ACA) limited an employer’s ability to offer a contribution towards their employee’s individual health insurance premium. The qualified small employer HRA (QSEHRA) did help to fix some of the regulations imposed by the ACA, but there were still challenges for employees seeking relief from their expensive one-size-fits-all group health plan.
Then in 2017, the agencies (Departments of Treasury, Labor and Health and Human Services) began a mission to expand business’ use of HRAs for individual insurance. After almost 2 years of planning new rules were released establishing ICHRA as a viable option for large and small employers beginning January 1, 2020.
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Is ICHRA compliant for large employers and what is the benefit for small employers in Florida?
If you’re an employer you can offer an ICHRA, period. Companies ranging from just a handful of employees to larger employers with thousands of workers can benefit from an ICHRA. ICHRA eliminates the burden of traditional group insurance plans and offers a wide variety of benefits to both employers AND employees. It provides flexibility in costs and allows for different levels of contribution based on employee classes.
Implementing an ICHRA is simple and its design allows employees to choose the insurance that fits their specific needs, and ICHRA Administration is a breeze with Flyte’s innovative system.
Employers decide on what to contribute per employee class and their employees choose a plan that fits their needs. After the employee submits proof of their expenses, and within the allotted allowance amount, the company reimburses the employee as per the plan’s design.
Every employee within that determined class of employees is eligible provided that they are covered under an individual policy. Is ICHRA a good option for your business, click the Get ICHRA button at the top of your screen for information on how to get started today.
The process for implementing ICHRA benefits is simple, and its design allows employees to choose the plan and benefits that best meet their unique needs. From an administration perspective, ICHRA’s method is straight-forward. An employer decides what allowance each employee class will receive. Then, employees make their health care purchases, including insurance, and submit proof of their expenses. Within the allotted allowance amount, the company reimburses them for those expenses. It’s that easy!
Who’s eligible? As long as an employee has coverage under an individual health insurance policy, and the employer chooses to include their employee class in the ICHRA, they’re eligible.
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Who benefits from an ICHRA?
Throughout Florida, ICHRA provides an advantage over group health insurance, like we’ve never seen before. Employers decide the cost and employees choose what’s right for them.
FLEXIBLE
ICHRA provides the flexibility employers have sought after for decades. Employers choose a contribution that meets the company’s goals without any caps or minimums. They choose which employees to offer ICHRA by selecting one or more of the designated classes. Employees shop all available individual policies available in their area and enroll in a plan specific to their needs and budget.
EMPLOYEE ATTRACTION
Today’s employers are competing for talented employees to fill a variety of jobs. Employers who offer benefits are considered first by prospective employees. Simply providing benefits can be an expensive, but to offer a plan that meets everyone’s needs is even more expensive. Not with ICHRA! ICHRA allows an employer to provide freedom of choice to each eligible employee without spending thousands (or more) per month per employee. Each employee is unique, wouldn’t you like to offer a benefit that is too.
COST MANAGEMENT
Finally! Employers are in the driver’s seat when it comes to how much benefits will cost for the company. ICHRA allows employers to control the costs of the benefits down to the penny. In an environment where annual increases are the norm, ICHRA puts today’s employer in a position to spend as much or as little as they choose. That’s right, ICHRA protects your business and your employees.
COMPLIANCE
Everything you’ve learned about ICHRA applies to large and small employers, but for Applicable Large Employers (Click HERE if you are not sure if that applies to you, or call us and we’ll help) ICHRA can meet all of the Employer Mandate requirements imposed by the Affordable Care Act. Provided some basic affordability requirements are met, simply offering an ICHRA meets the full scope of the mandate. Yes, you read that correctly. By simply offering an Affordable ICHRA, regardless if anyone enrolls in it, you have satisfied the requirements of the ACA. We’re here to help! Contact us today to learn how ACA Compliance can be more affordable than you ever thought possible.
TAX SAVINGS
ICHRA comes with a variety of benefits, the best being that all money that comes through is 100% tax free. All amounts contributed by employers are exempt from wages and are tax deductible, and any additional amount contributed by employees can be done on a pretax basis thus reducing everyone’s overall tax liability. Bottom line, if an employer offers this option the entire individual policy can be paid tax free. We have made this process very simple and hassle free for employers of all size. Contact us today for more information on how easy this can be.
ADMINISTRATION
Managing benefits can be difficult and often takes a team of people. Many businesses see this work as a significant burden on their company, and an expensive one. An ICHRA can be set up and administered internally by the business or it can be managed by an administrator, like Flyte HCM. We’ve made ICHRA very simple and will gladly show you how it’s done. That said, if you want to remove the stress of record keeping, managing transactions, and overseeing compliance, then hiring an administrator may be a great fit. We are and affordable and friendly option for employers in any state and of any size. We can support all of your ICHRA and ACA Compliance needs.
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Is ICHRA complicated?
SIMPLE AND EFFICIENT
Our ICHRA platform is a simple four-step process:
- We work together to design a plan that fits your needs including: defining reimbursement limits, setting eligibility requirements and planning enrollment.
- Each eligible employee shops for and purchases an individual plan specific to their unique personal and family needs.
- Claims are submitted by employees for reimbursement.
- Each individual is reimbursed for their approved claim.
ICHRA EMPLOYEE CLASSES
Employers have the freedom to define reimbursement amounts and rules for different groups of employees. These groups are referred to as “classes” and class options are as follows:
- Full-time and part-time employee status
- Salaried or non-salaried workers
- Seasonal or temporary staff
- Geographic rating areas
- Coverage waiting periods
The use of classes within the ICHRA system provides an amazing level of flexibility to employers and businesses as they are creating an offering that works for everyone. See our post on Employee Classes. https://ichra.com/ichra-and-employee-classes/
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Flexibility built in for your business
and your staff.
ANNUAL AND MID-YEAR ENROLLMENT
To be eligible for an ICHRA plan in Florida, all employees must have coverage through an individual health insurance plan. Plan options include: ON or OFF exchange coverage, Medicare Parts A and B, or Medicare Part C. There is a short enrollment window that opens and closes each year. This time period is called Open Enrollment. During this time anyone is eligible to enroll in an individual policy of their choosing. Outside that window, specific life events can trigger a mid-year enrollment window called a Special Enrollment Period – things such as getting married, having a baby, and moving are common events that trigger a Special Enrollment Period. A new event that triggers a Special Enrollment Period is eligibility in an ICHRA plan. So, employees currently enrolled in your ICHRA can change their plan at the end of the year during Open Enrollment, or for an employee coming on mid-year, once they are eligible to enroll in your ICHRA they are also eligible to enroll in an individual policy.
One item to note is that employers offering an ICHRA will need to offer employees the chance to “opt-out” of the ICHRA plan. This allows them to claim their tax credits through an exchange instead of receiving the employer contribution.
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Is ICHRA insurance?
The quick answer is, no. ICHRA is not insurance. By offering a ICHRA, an employer is simply making a promise to pay their employees a specific amount of money in the form of a reimbursement towards the cost of the employees individual health insurance.
ICHRA is considered an alternative to Group Insurance, but an ICHRA is not an insurance policy.
Employees are encouraged to work with a licensed agent in their state to shop for and purchase an individual insurance policy that is specific to their needs. Employees can choose from a variety of options like premium, deductible, coinsurance vs HSA, and much more. Their coverage will finally be tailored to their needs.
FREQUENTLY ASKED QUESTIONS REGARDING ICHRA IN Florida
- All
- ICHRA Administration
- ICHRA Administration (day to day)
- ICHRA Compliance (details)
- ICHRA General Questions (high level)
ICHRA administration refers to the management of reimbursements, compliance, and employee communications related to an ICHRA plan. Many employers use a third-party administrator to handle these functions for efficiency and compliance.
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’s use of HRAs once again. In June of 2019, new rules were released, establishing ICHRA as an option for 2020.
Third-party administration helps employers stay compliant, manage reimbursements, and simplify the employee experience. Admins handle documentation, reporting, claims processing and remittance of reimbursements.
Employers set reimbursement amounts and define eligibility. Employees purchase their own health plans and submit proof of expenses. Employers (or a third-party administrator) review and approve reimbursements according to plan guidelines.
Yes, when properly designed and administered, ICHRA complies with IRS, ACA, and ERISA regulations. Using a third-party administrator ensures compliance and simplifies documentation requirements.
No. As part of the ICHRA ruling, employers implementing an ICHRA cannot take part in, or influence, which health insurance their employees purchase.
It’s simple. ICHRA Administration puts cost control back in the employer’s hands and puts the choice of health coverage in the employee’s.
We’d love to help you explore how ICHRA can work for your organization. Reach out to the Flyte HCM team—we’re here to answer your questions, walk you through the setup process, and support you every step of the way.
Call us: (952) 746-0000
Email: Sales@flytehcm.com We’re excited to connect with you!
ICHRA stands for Individual Coverage Health Reimbursement Arrangement and is a ruling brought down by the Departments of Treasury, Health and Human Services and Labor which allows for and provides guidance to employers wishing to reimburse money toward Individual Health Insurance premiums as well as specific Excepted Benefits. See our blog post for more information.
Any employer of any size can offer an ICHRA, regardless of industry.
Employers have a great deal of flexibility in what their money can be used for, and the dollar limits. For example, an employer can offer money toward individual premiums, specific out of pocket expenses, or both. There are compliance considerations to each so please visit our Blog page for details regarding compliance and plan design considerations.
An ICHRA is considered an ERISA Plan so there are specific areas of compliance that need to be addressed for this great option to be complaint. A few of these considerations are as follow:
- Plan documentation is required which includes a Master Plan Document, SBC and Summary Plan Description.
- Timely and specific communication with your employees is necessary.
- An ICHRA is subject to all ERISA non-discrimination requirements.
Please visit our Blog page for more information. Please contact us with any questions you may have.
A few additional considerations are as follows:
- You may offer different amounts of money to different classes of employees, but those amounts cannot vary past a certain amount and the classes available are outlined in the ICHRA ruling.
- You can offer money to an employee for medical expenses only, but those expenses must be in conjunction with a medical plan.
- An employer may allow the employees portion of their individual premium be deducted from wages on a pretax basis.
Employees must be enrolled in an ACA-compliant individual health insurance plan that is metal level (Bronze, Silver, Gold, or Platinum), or be enrolled in Medicare Parts A, B, C, or D. To receive reimbursements, employees are also required to provide proof of coverage that meets these requirements.
No, ICHRA does not have a minimum participation requirement, unlike traditional group health plans. Employers can offer the benefit even if only a few employees choose to participate.
No, the ICHRA ruling does not stipulate a maximum or minimum amount required in order to be compliant. See our Blog page for more information with regard to any Plan design considerations.
Yes, ALEs can offer ICHRA to employees, and if the ICHRA meets affordability requirements, it will count as an offer of coverage that meets Minimum Value satisfying both employer mandates.
Yes, if an ICHRA is deemed affordable under IRS guidelines, it satisfies both mandates for Applicable Large Employers (ALEs) under the ACA. This does include minimum value.
The ICHRA ruling provides guidance that employers can offer varying contribution amounts provided the amounts are divided by approved classes of employee.
The approved classes are as follows:
- Full-Time Employees
- Part-Time Employees
- Seasonal Employees
- Employees covered by a collective bargaining agreement
- Employees who have not satisfied a waiting period for coverage
- Non-Resident aliens with no US-based income
- Employees whose primary site of employment is in the same rating area
- Salaried Employees
- Non-Salaried Employees
- Temporary Employees of a staffing firm
- A combination of two or more of the approved classes
No, employees can still enroll in a marketplace (exchange) plan. However, if they accept the ICHRA or it is deemed affordable, they may not be eligible for premium tax credits (PTC) through the exchange. It is important to note that employees cannot receive a PTC and participate in the ICHRA.
No, new hires can enroll as soon as they become eligible, based on the employer’s established waiting period. ICHRA creates a Special Enrollment Period (SEP), allowing flexibility for mid-year hires. Most insurance carriers will require a copy of the ICHRA Initial Notice and the employee’s eligibility date to approve the SEP, so it’s important to provide this documentation promptly when helping employees enroll in coverage.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is a government-approved HRA introduced in 2020 that allows employers to reimburse employees for individual health insurance premiums and medical expenses on a tax-free basis. This differs from traditional group plans by offering flexibility and employee choice.
An ICHRA health plan is not a traditional group health plan. Instead, it is an arrangement where employers provide tax-free reimbursements to employees for purchasing their own individual health insurance coverage. Employees can shop for plans through the ACA marketplace, private insurers, or brokers, giving them more control over their healthcare choices.
Employers set a defined, tax-free reimbursement amount for employees to use toward individual health insurance and, if allowed, other medical expenses. Employees purchase an ACA-compliant individual health insurance plan and submit proof of their premiums and eligible expenses. Employers then reimburse employees up to the set amount. For example, if an employer offers $400 per month and an employee purchases a $450/month plan, the employee would pay $50 out-of-pocket. However, employers can customize reimbursement amounts and expense eligibility, meaning ICHRA structures may vary.
ICHRA itself is not an insurance plan but a reimbursement arrangement that is considered a Self-funded Group Plan. Employees must purchase an individual health insurance plan to participate in the ICHRA. These plans can be purchased on state or federal marketplaces, through brokers, or directly from insurance carriers.
ICHRA coverage includes individual health insurance premiums and, depending on employer preferences, may also cover certain out-of-pocket medical expenses such as deductibles and copays. Some employers choose to offer reimbursement for only premiums, while others allow additional expenses.
ICHRA can be offered by businesses of any size and allows different reimbursement amounts for different employee classes.
QSEHRA is only for employers with fewer than 50 employees and must offer the same reimbursement amount to all employees (with some adjustments for age and family size). Additionally, QSEHRA has annual contribution limits, whereas ICHRA does not.
Yes, an ICHRA can reimburse Medicare premiums, including Medicare Part A (if applicable), Part B, Part C (Medicare Advantage), and Part D prescription drug plans.
ICHRA was introduced as a health benefits option starting on January 1, 2020, following federal rule changes in 2019. It was designed to provide employers with a flexible, tax-efficient way to offer health benefits while giving employees greater choice.
Pros:
- Provides employees with choice and flexibility.
- Helps employers control healthcare costs.
- Tax-free reimbursements for both employers and employees.
- Can be structured to meet compliance needs.
- Allows for employer-defined employee classes.
Cons:
- Employees must shop for their own coverage, which may require guidance.
- Some individual markets may have limited plan options depending on the region.
- Employers need to set up and manage the reimbursement process. however it is recommended that employers use a compliant Benefits administrator to do this.
ICHRA does not provide a medical plan itself but allows employees to buy their own individual health insurance, which can include major medical plans that meet ACA requirements or Medicare. These plans can be purchased on exchanges or directly from carriers.
- Cost control and flexibility for employers.
- Employees can choose their preferred insurance plan.
- Tax-free reimbursements reduce overall healthcare costs.
- Can be customized by employee class.
- Provides a modern alternative to traditional group health plans.
- ICHRA reimburses individual health insurance premiums and medical expenses.
- ICHRA also has different compliance and regulatory requirements compared to traditional HRAs.
- Traditional HRA is typically paired with a group health plan and cannot reimburse individual insurance premiums.
Employers do not pay for insurance directly. Instead, they reimburse employees for their premiums and qualifying expenses after proof of payment is provided. This allows employers to manage costs without dealing with insurance carriers directly.
Employees choose and purchase their own ACA-compliant individual health insurance plan or be enrolled in Medicare, including applicable Medicare parts. After enrolling, they must submit an official invoice or billing statement from their insurance provider as proof of premium. If the employer allows reimbursement for additional medical expenses, employees must submit detailed documentation (such as an Explanation of Benefits (EOB) or itemized receipts) to be reimbursed for eligible expenses.
- Employees can select a health plan that fits their needs.
- Tax-free reimbursements lower costs for both employees and employers.
- No network restrictions—employees can choose any insurance carrier.
- Portability—employees keep their insurance if they change jobs.
- Employers can offer tailored benefits to different employee classes.
