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:
- Assist with the setup of the ICHRA. The ICHRA administrator helps design the plan, determine employee eligibility and budgets, and set up legal documents.
- Help employees enroll in the ICHRA. A successful ICHRA launch requires change management efforts. A plan administrator will assist with communicating the new plan to employees and assisting them with enrollment.
- Process reimbursements. An ICHRA administrator will oversee reimbursement processing, whereby employees provide proof of their qualified medical expenses including individual insurance premiums.
- Manage changes to the ICHRA rules and regulations. As healthcare policy continually evolves, the administrator stays up to date on the latest rules and regulations to help prevent fines for employers.
- Answer employee questions. After employees sign up, an administrator will facilitate questions and answer regarding reimbursements, while maintaining the employee’s privacy.
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
- How long has the ICHRA administrator been working with ICHRA plans?
- Have they successfully completed a SOC audit to ensure their clients' private information is protected?
- How many clients do they have?
- Do they have a good reputation and track record with their clients?
- Do they have any negative reviews? If so, why?
Plan design
- What are the details of their ICHRA plans?
- Can they help you determine a reasonable, affordable budget for your ICHRA?
- Can they ensure your ICHRA plan meets all legal and IRS requirements?
Enrollment and reimbursements
- What ICHRA education do they offer employees?
- How do they help employees choose and enroll in the right plan for them?
- Do they offer an easy-to-use platform for reimbursements?
- Do they offer ongoing customer support throughout the year?
Other things to consider when searching for the right ICHRA administrator
Process, compliance, and reporting. Check to see if they offer services around:
- Legal plan documentation and plan summaries
- Employee MEC verification
- Tax reporting, IRS deadlines, year-end W2 Reporting, Form 720 (PCORTF), COBRA, Administration (if not exempt), ERISA
- HIPAA and PHI compliance
- A process to substantiate employee claims
- A reimbursement mechanism
Employee Communication
When considering an administrator, ask about their change management communication plan. See if they provide:
- Communication materials for employees and a strong onboarding process
- Employee support while they’re shopping for individual health insurance plans
- An easy-to-use platform to request reimbursements
- Employer support with understanding compliance and legalese
- A quick, easy sign-up process and platform dashboard
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.
SureCo's turnkey ICHRA Solution and Enrollment Platform can help with your company’s ICHRA needs. Learn more about SureCo or schedule a consultation and demo today.
