Have you heard? There’s a new HRA (Health Reimbursement Arrangement) available called the Individual Coverage Health Reimbursement Arrangement, or ICHRA. Introduced in 2020 by the U.S. government, the ICHRA gives employers another option they can offer employees beyond the usual, traditional job-based healthcare plans. Better yet, the ICHRA is tax free.
However, since the ICHRA is still relatively new, it’s important to identify a knowledgeable and experienced ICHRA administrator to help you implement this beneficial healthcare option and stay compliant around its regulations. Let’s dive in and find out how.
First, what is the ICHRA?
An HRA is an employer-funded health plan that reimburses employees for qualified medical expenses and, in some cases, insurance premiums. An ICHRA is a formal group health plan that allows organizations of all sizes to reimburse their employees — tax free — for their individual health insurance premiums, out-of-pocket healthcare expenses, other qualifying medical expenses.
Previously, employees couldn’t pay their individual health insurance premiums with HRAs, but with ICHRAs, they can. ICHRAs allow employees to purchase their own individual or family health insurance, be reimbursed for the monthly premium — and enjoy tax advantages, since the ICHRA is an IRS-approved health benefit. An ICHRA account’s funds are not subject to taxes and can be used to pay for wide-ranging healthcare costs — such as premiums, co-pays, and dental and vision expenses.
ICHRAs provide a great alternative for employers looking to save on premium costs while offering employees greater choice in health coverage.
What is an ICHRA administrator, and what does their role entail?
An ICHRA administrator helps businesses implement and manage their ICHRAs. These professionals can be key partners in helping businesses establish and maintain ICHRAs that are compliant with the IRS.
Although setting up an ICHRA can be a fairly easy process, an ICHRA administrator is responsible for making sure all rules and regulations are followed. They are responsible for overseeing the entire ICHRA process of implementation and performing these duties:
How to find a top-notch ICHRA administrator
When looking for an ICHRA administrator, be sure to ask questions that will help you understand the capabilities of the administrators you are considering and ensure they’re a good fit for your company. Ask critical questions around:
Reputation and customer service
Enrollment and reimbursements
Other things to consider when searching for the right ICHRA administrator
Process, compliance, and reporting. Check to see if they offer services around:
Employee Communication. When considering an administrator, ask about their change management communication plan. See if they provide:
More help with finding the right administrator
Since ICHRAs have only been around a few years, it could be challenging to find an experienced administrator. However, by knowing what to look for and ask, you’re now on your way to finding an experienced administrator who can address your company’s unique needs, challenges, and opportunities in implementing an ICHRA plan.