If you're unfamiliar with ICHRA (Individual Coverage Health Reimbursement Arrangement) or seeking more information about this innovative healthcare option, you've come to the right place. Welcome to our comprehensive blog post that aims to answer all the most frequently asked questions about ICHRA. We recently convened a panel of benefits experts for ICHRA Masterclass webinar with SHRM. During the virtual event, we delved into the key aspects of ICHRA, its benefits, eligibility criteria, enrollment process, and much more. Below, we’re answering every question that came from that discussion. Whether you're a benefits consultant considering ICHRA for your clients or an employer looking for an affordable and flexible alternative to group health plans, we've got you covered.
To make life easier, we've divided the questions into sections:
And if you missed our ICHRA Masterclass, check out the webinar on-demand now.
General ICHRA Questions
How long have ICHRAs been around?
ICHRAs are a relatively new form of employer-sponsored health coverage that was introduced January 1, 2020, but they are already proving to be a strong solution for many clients/companies.
Traditionally, HRAs are commonly used with group health plans. Before the Affordable Care Act (ACA) passed in 2010, it was common for small employers to use HRAs to reimburse for individual health insurance. However, unintended regulations that spun out of the ACA put a halt to the practice of reimbursing (and even penalized employers who continued doing it). Although it took a while, congress finally addressed the problem. In December 2016, a hodge-podge bill called the 21st Century Cures Act was passed by a Republican Congress and signed by President Obama. The bill created the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), making it permissible for small employers to reimburse for individual insurance if the employers (and employees) met several strict guidelines.
With QSEHRA gaining traction, the Trump Administration issued additional guidance to expand the use of HRAs. The team behind SureCo was instrumental in lobbying for this change, and in October 2018, the U.S. Departments of the Treasury, Health and Human Services (HHS), and Labor proposed new regulations to expand the usability of health reimbursement arrangements (HRAs). The rules were finalized in June 2019 and created two new types of HRAs: the Individual Coverage HRA (ICHRA) and the Excepted Benefit HRA.
The HHS estimates that by the end of 2025, roughly 800,000 employers will offer ICHRAs to pay for insurance for more than 11 million employees.
Is there a reason why a broker or benefits consultant would not support an ICHRA?
ICHRAs are relatively new, so it might take some time for a broker to learn and adjust. And an ICHRA may not be right for every company a broker works with. But SureCo works with brokers to show how ICHRAs can be a great solution for many companies.
We provide robust incentives for our broker partners to help them maintain their relationship with their clients. They are also encouraged to continue writing their own ancillary benefits, which we can then incorporate directly into our Enrollment Platform.
With SureCo and your broker, you’ll have a powerhouse team behind you!
Download our Partner Guide for more information on how SureCo works with brokers to create a winning scenario for all parties.
Why would a company need an ICHRA administrator instead of administering it themselves?
Although it’s technically possible for companies to administer an ICHRA on their own, we don’t recommend it, especially for large groups and overtaxed HR teams.
SureCo’s platform relieves the administrative burden, helps ensure compliance, and frees up HR teams to do other work. Advanced technology makes it easy to enroll hundreds of employees in individual plans in less time than it would take to enroll them in traditional group plans. Plus it simplifies the selection process, so every employee can compare the plans that are best for them, according to their individual needs. Our dedicated white-glove customer service team is there every step of the way, from implementation and open enrollment to ongoing support throughout the year.
Our platform also integrates with 150 of the top HRIS and payroll systems, which makes it simple to add to your existing tech stack.
Find out more about SureCo’s streamlined Enrollment Platform.
Is there an application of this service on a global scale?
ICHRAs can be utilized in companies with foreign business. One of the 11 available employee classifications is “Foreign Employees Who Work Abroad.”
Speak with a Benefits Expert today to find out how it could work for your company.
The majority of our staff say that they want medical coverage but do not enroll due to cost. If right now 10% of staff as a large employer participate, and by offering ICHRA 90% participate, how would we not lose out by choosing ICHRA?
An increase in participation can actually help your company’s bottom line by simultaneously increasing employee satisfaction. Most companies find that they save more in retention costs by offering employees a freedom of choice in their health insurance than they do by sticking to a group plan that doesn’t meet their employees needs.
Read more about why mid-market and large employers are switching to an ICHRA.
Who develops the ICHRA contribution schedule for a given employer?
The amount of contribution is ultimately up to the employer, but your benefits consultant or broker and your ICHRA administrator can work with you to determine the amount that will work best for your business and ensure that you meet the ACA’s affordability criteria.
Read more about ACA affordability penalties.
Does an ICHRA have to be offered to all employees even if they are waiving healthcare coverage? Who is not eligible to participate in ICHRA?
ICHRAs can be offered to only certain classes of employees, but they must be offered to everyone in that class. Employees are not eligible to participate in an ICHRA if they are covered by any kind of group plan, including a spouse or family member’s, or other kinds of coverage not considered individual health coverage, such as COBRA.
Read more about ICHRA employee classifications.
Is an ICHRA Right for My Company?
What advice would you extend to an employer who is considering utilizing an ICHRA for remote employees only?
Utilizing an ICHRA for remote employees only is a choice employers make quite often, and it can be a very beneficial option for those employees as they are able to access all the individual carriers and plans in their areas, giving them greater power of choice to select a plan that fits their budget and medical needs. However, there are a few compliance pieces to pay attention to: For example, the class created for those remote workers must meet the class size minimums required within the ICHRA regulation. Make sure your ICHRA administrator will check all the compliance pieces on your behalf.
Read more about what to look for in an ICHRA administrator.
How does an older workforce affect an ICHRA?
ICHRAs are fantastic options for companies with older employees. Because the company is not experience rated on the individual market, it does not matter if someone has high utilization or pre-existing conditions.
Additionally, for businesses with employees who are over 65, ICHRAs are compatible with Medicare.
Does an ICHRA benefit a small-size employer, say less than 50 employees?
Businesses of any size can benefit from the cost-saving advantages of ICHRAs.
SureCo's Enrollment Platform provides the most advanced technology for companies to administer an ICHRA at scale. Most of our customers have a minimum of 150 eligible employees, and we've onboarded organizations with more than 2,500 employees. Our customers’ average annual savings on premiums is 24%.
My husband and I have a small consulting company, just the two of us. What are the advantages of switching from a Humana Advantage Plan to an ICHRA?
This is a very specific question that seems to be Medicare-related. If the company is comprised of only two individuals and you are both currently on Medicare, there may not be a benefit to implementing the ICHRA.
Learn more about ICHRA and Medicare.
What are the advantages of an ICHRA for a seasonal business who hires/separates and rehires employees every year?
For this type of business, an ICHRA works well because there are no participation rules. We simply work with your payroll to make the necessary changes and enrollment.
Read more about why ICHRAs are a good solution for companies with high turnover.
What about employers who are self insured? Do you think a high-claim, self-insured company with 50+ employees would benefit from ICHRA?
ICHRA works especially well with those customers who are ASO. The banking and administration is simplified, the plan experience sits in the individual carrier's state plan, and the costs and risk of stop loss is removed.
We currently are self-funded with stop loss. How would a move to this type of plan look?
There are some factors that could change the answer to this question, which mostly center around imprest balance, run-out, and claims incurred but not paid. Typically, you would just need to continue with administrative services and hold reserves for a short period of time to account for these factors. Other than that, the transition would be fairly simple.
Schedule a call with a SureCo Benefits Expert now to dig deeper into the specifics of this.
ICHRA Administration Questions
Does SureCo automatically integrate with payroll? Or are you providing a single report to upload?
SureCo integrates with 170 of the top payroll systems and will assess the integration capabilities during the migration stage. If integration is not possible for any reason, our team would then do a manual report upload.
Do you have life feed file access with HRIS softwares?
Yes, most integrations are through API links.
What kind of admin cost is it for an employer?
Administrative costs can vary based on factors such as employee headcount, estimated participation, and geographic location. Typically, customers still see a cost savings north of 20% (for premium contributions and fees) when moving from a fully-insured or self-funded group to SureCo's Enrollment Platform.
Is the ICHRA plan calendar based, not plan year?
The individual market, which ICHRA utilizes, is on a calendar year. If a company opts into an ICHRA during a time that is not January 1, it will have coverage for the remainder of the year and be able to have another open enrollment in November for new plans starting the following January 1. ICHRA serves as a qualifying event, meaning a company can change/offer at any time of the year. Renewals will always have open enrollment around November for January 1 effective dates.
How does an ICHRA work with 1095 forms? Does that plan provide the required tax forms?
ICHRA administrators should provide the necessary raw data for the 1095 filing. SureCo provides this service to our customers.
Read more about what to look for in an ICHRA administrator.
Does SureCo work with PEOs?
Sureco integrates with most PEOs, but SureCo would be the benefits administration platform, not the PEO. Most of the time, we find it beneficial for clients to switch from PEO to ICHRA.
How long is the implementation process?
SureCo has a formal implementation timeline of approximately 8 weeks lead time. This allows for proper communication, integration, and education for the employees to improve the overall experience.
Does SureCo use an ICHRA?
Yes, we utilize our own Enrollment Platform for our employees. Our own HR team is enthusiastic about the open enrollment process with ICHRA. They love the customizable solutions, never having to worry about compliance or COBRA, and being able to save time on administrative tasks and focus on long-term strategy.
ICHRA Coverage Questions
If one family has multiple plans, how does that work administratively in terms of contribution reimbursements?
Can you use ICHRA dollars to pay for COBRA from your spouse’s coverage to maintain your current coverage?
If the intent is to use ICHRA contribution from Employer A (let’s say Joe’s employer) to pay for COBRA from Employer B (say Joe’s spouse Linda’s COBRA that both are currently on), then the answer would be no. This is with the assumption that Linda’s COBRA plan is a traditional group plan, not an individual/family plan. ICHRA cannot be used to pay for a group health insurance policy. However, if Linda had an existing policy and Joe’s employer was contributing to spousal coverage through the ICHRA, then the ICHRA dollars could be extended to Linda’s policy to help pay for premiums and/or they could obtain a new family play together through the ICHRA provided from Joe’s employer.
Read more about how ICHRA virtually eliminates COBRA.
Does Medicare work with ICHRA?
Companies are now able to contribute pre-tax dollars to employees' Medicare supplements with ICHRA. SureCo educates the employees on what is now available to them through our Medicare specialist. This helps to lower costs for the employee and the employer when they go to Medicare. They simply apply the ICHRA employer contribution to the Medicare cost.
Read more about ICHRAs and Medicare.
Can you still offer your employees an HSA with an ICHRA?
Most groups offer premium-only contribution (as opposed to medical expense reimbursement). If you are providing premium-only contribution/reimbursement then yes, you can still contribute. In order to use their HSA funds, they would just want to make sure that they elect in an HSA compatible health plan.
Read more about spending-account ICHRAs vs. premium-only ICHRAs.