ICHRA & Non-Group Coverage

Defined contribution

You decide the budget. Employees choose the plan.

An Individual Coverage HRA inverts the usual arrangement. Instead of buying a group plan and absorbing whatever the renewal does to it, you set a monthly reimbursement amount, employees buy their own individual coverage, and you reimburse tax-free up to that amount.

The employer's side

Cost is whatever you set it to be
No renewal negotiation, no rate increase
Reimbursements are tax-free to both sides
Amounts can vary by class — full time, part time, seasonal, by location
No participation minimum to satisfy

The employee's side

Their plan, their network, their doctor
Coverage follows them if they leave
Spouse and children covered on the same policy
They see the real price of health insurance, which cuts both ways
A premium tax credit is forfeited if the offer is affordable

Before you commit

Where ICHRA works, and where it does not.

The individual market in your employees' states decides this, not the design of the HRA. Somewhere with four carriers and broad networks is a different proposition to a rural county with one narrow-network plan.

Ask us to check your states

✓

Works well

Employees spread across many states. A workforce that already declines the group plan in numbers. Predictable budgeting mattering more than richness of benefit. Groups that cannot pass a participation test.

✗

Works badly

Thin individual markets. An older workforce, where individual premiums rise steeply with age and a flat contribution stops going far. Employees used to a rich group plan, who will read it as a cut whatever the arithmetic says.

!

Requires care

Applicable large employers still face §4980H penalties if the ICHRA is not affordable. Affordability is calculated against the lowest-cost silver plan in each employee's own rating area, which means the answer differs employee by employee.

What has to exist before the first reimbursement

An ICHRA is a group health plan, and it needs the paperwork of one. A written plan document and summary plan description. A notice to eligible employees at least ninety days before the plan year starts, setting out the amount, the classes, and how it affects any premium tax credit they might otherwise claim. A substantiation process proving each employee actually holds individual coverage each month. ERISA applies. Depending on size, so does Form 5500.

QSEHRA, for employers under fifty

A smaller, simpler cousin. Available only to employers with fewer than fifty full-time equivalents who offer no group health plan at all. Contribution limits are set annually by the IRS and are considerably lower than what an ICHRA permits, and every eligible employee must be offered the same amount. Where it fits, it is much less administrative work.

We prepare the documents, handle the notice, and set up substantiation. Plan documents covers what that involves.

See what this would cost you

Request a review

Send the renewal, and we will tell you what we would change

No fee, and no obligation to move the business. Most employers who contact us are simply trying to work out whether the number in front of them is a fair one.

(800) 779-4090
info@waughagency.insure
22 Bateson Drive, Andover, MA 01810

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