ICHRA
ICHRA – Individual Coverage Health Reimbursement Arrangement.
This type of Health Reimbursement Arrangement (ICHRA) is a way for your company to provide healthcare benefits to your team. It’s a new type of health benefit that allows you to use pre-tax money from your business to reimburse your team for any of their healthcare expenses, including health insurance, dental insurance, vision insurance, and more.
ICHRAs are attractive because they’re a way to provide more flexible and cost-effective healthcare benefits to your team…..? or is it.
Is Ichra a good idea?
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.
Is an Ichra subject to Erisa?
While it’s not an insurance policy, the individual coverage health reimbursement arrangement (ICHRA) is considered a group plan and is therefore subject to ERISA regulations.(Oct 25, 2023).
Latest rules: https://www.healthcare.gov/job-based-help/
After this, it reads like you have to have an insurance plan to be eligible for employer funded HRA funds. Employees can use the funds for an individual insurance plan on the marketplace, and then they may not qualify for premium tax credit because of this employer benefit. ICHRA is considered a group employer plan and follows those rules….
At this point of view I can find better ways to use those funds that are not so limiting. Why not just create your own group(because groups get better rates) and pay a flat monthly fee per employee and avoid all the limitations. Your employees will love the $0 out of pocket experience wherever they are! This may be good a good fit for your team.