Captain Contributor Explains ICHRAs
An Individual Coverage Health Reimbursement Account, or ICHRA, is a special type of HRA that employers can use to help employees obtain health insurance coverage without the need to offer a group health insurance plan.
What is an ICHRA?
Under an ICHRA, employees obtain their own health insurance coverage and the employer reimburses them for part or all of the monthly premium. The employer also has the option of reimbursing for certain medical expenses, such as copays or prescriptions. Participating employees usually are required to submit proof of the insurance coverage prior to reimbursement.
ICHRAs are a win-win for employers and employees alike. Employers are able to help their employees afford the health insurance coverage they need. Employees can shop for the coverage they want and receive employer assistance with the premium, instead of having to accept a one-size-fits-all group health plan.
How do ICHRAs work?
ICHRA accounts are completely employer-funded, just like a regular HRA account. The employer decides how much to fund for each employee, and any unspent balance goes back to the employer. The employer also decides how and how often reimbursements are made.
ICHRAs can be used to reimburse premiums for private health insurance, coverage obtained through the health insurance marketplace, Medicare Parts A and B, and Medicare Part C (otherwise known as Medicare Advantage).
Reimbursements received under ICHRA plans are not taxable to the employee.
Can anyone have an ICHRA?
Employers decide which employees are eligible for ICHRA participation. However, you cannot participate in an ICHRA reimbursement plan and enroll in the company-sponsored group health insurance plan at the same time.
What can I buy with an ICHRA?
In addition to your health insurance premium, the ICHRA may reimburse for additional qualified healthcare expenses. Review the terms of your ICHRA plan or check with your benefits administrator to confirm what expenses might be qualified for reimbursement.