Compliance Corner: ICHRA Compliance for Employers

An Individual Coverage Health Reimbursement Arrangement, or ICHRA, is an alternative to traditional group health plan coverage, which allows employers of any size to reimburse their employees a fixed amount of money, tax-free, each month for their individual health insurance or Medicare premiums. This option provides quality health insurance benefits to employees
with the same tax benefits of a traditional group health insurance plan.

However, ICHRAs still have to comply with the same employer-based coverage rules, notices, and filings as traditional group health insurance plans. Here is a quick list for those considering these vehicles for their employee benefit packages:

Annual Notices. The most common annual notices include, but aren’t limited to: the Summary of Benefits & Coverage for the ICHRA, Patient Protection Model Disclosure, Special Enrollment Notice, Children’s Health Insurance Program (CHIP) Notice, Health Insurance Marketplace Notice, and the Women’s Health & Reproductive Care Act Notice. ICHRA groups must also provide the Annual ICHRA Notice.Another subset of ‘if applicable’ notices include: Wellness Program Disclosure, Wellness Notice, and those not captured in the insurance company policies.

COBRA Continuation of Coverage. This works exactly the same as it does for any other group coverage and must be made available if the employer is subject to COBRA.
Summary Plan Description (SPD). The SPD describes employer-specific administrative or eligibility rules for the coverages offered by the employer. If the employer has many fully insured plans, it is also often called a “Wrap SPD” in order to incorporate multiple benefits.
Plan Document. With an ICHRA, the employer can cover individual and Medicare premiums as well as eligible IRS Code 213(d) medical care expenses, for example, deductibles or out-of-pocket amounts, if desired. The Plan Document describes how the ICHRA will be administered and the eligible expenses under the plan.
Premium Conversion or Premium Only Plan (POP Document). This is a document that is very much boilerplate confirming the employer will comply with IRS rules for status changes and Qualifying Events. In doing so, the employer and their employees can save on their payroll taxes.

NOTE: Federal tax law prohibits employers from allowing employees to pay for Exchange coverage on a pre-tax basis.

ACA 1094/1095-B series. For groups under 50, the ICHRA itself is considered a self-funded plan (like all HRAs are) and are filed annually with the IRS and made available to employees.
Large Groups (51+)

1. ACA Reporting for Applicable Large Employers (ALEs). This includes offers of coverage to 90 percent of employees that meet minimum value for essential health benefits and is considered “affordable” (8.39 percent is the standard set for 2024), as well as reporting of 1094C/1095C to the IRS and making the documents available to employees.
2. 5500 Filing. If there are more than 100 plan participants.

There are also rules about how the ICHRA works for age-based rating changes, exceptions to offering the ICHRA on the “same terms” to all participants, as well as minimum class sizes if the employer wishes to offer different set ups by class.

See the article titled, “ICHRAs Becoming More Mainstream” for more information about ICHRAs. Feel free to reach out to your ARC client advisor for a free consultation on whether an ICHRA is right for your employees.