1. ICHRA participants must be enrolled in individual coverage (or Medicare).
All individuals eligible for reimbursement under the ICHRA must be enrolled in individual health coverage or Medicare and provide proof of that coverage. There is an annual substantiation requirement that applies prior to enrollment in the ICHRA, and an ongoing substantiation requirement that applies each time reimbursement is requested.
2. The ICHRA must be offered on the same terms to all employees within a particular class.
If the ICHRA is not being offered to all employees, it must be offered to all employees within a specified class, generally on the same terms.
3. Employees offered the ICHRA cannot also be offered a traditional group medical plan.
If the ICHRA is offered within a class of employees, none of the employees within that class may also be eligible for the employer’s traditional group medical plan, if any. In addition, if an employer offers a traditional medical plan to some employees and an ICHRA other employees, minimum class size rules apply.
4. The ICHRA may be designed to reimburse any §213(d) qualifying medical expenses, including individual health coverage and Medicare premiums.
An ICHRA may be available to reimburse premiums, §213(d) qualifying medical expenses other than premiums, or a combination of the two. If the ICHRA will reimburse §213(d) qualifying medical expenses other than premiums, participants must be required to submit proper third-party substantiation before being reimbursed (or, alternatively, follow debit card procedures already approved for other types of HRAs and health FSAs).
5. ICHRA coverage options & ERISA safe harbor.
Most employees will need assistance navigating and enrolling in individual plan options. However, in order to avoid the individual health plans being subject to ERISA, the employer must not select or endorse any particular insurance carrier or coverage options, cannot receive any financial incentive, and must notify participants annually that the individual health insurance is not subject to ERISA. Individuals must be permitted to enroll in any qualifying individual health coverage, on or off-Exchange (i.e. the choice of plan must be completely voluntary).
6. ICHRA Network Access & Affordability.
Employers and employees will need to understand the network access and cost/affordability of the individual coverage options. For affordability, there are several considerations:
- Cost Comparison - Employers of all sizes will be interested in comparing the cost of individual coverage and group health plan coverage.
- PTC Eligibility - Employers of all sizes will also need to understand and communicate to employees how the ICHRA offering may impact eligibility for a premium tax credit (PTC) through a public Exchange. An individual who is enrolled in the ICHRA or who is offered an affordable ICHRA will not qualify for a premium tax credit through a public Exchange
- §4980H(b) Requirements - To avoid potential liability under §4980H(b), applicable large employers will need to ensure the ICHRA is affordable based on one of the affordability safe harbors (i.e. FPL, rate of pay, or Form W-2).
7. Participants must be able to opt out of coverage and waive future reimbursement.
Eligible participants must be given the option to opt out of ICHRA coverage and waive any future reimbursements in order to preserve PTC eligibility when applicable.
8. An annual notice must be provided to eligible individuals.
Employees who are eligible to participate in an ICHRA must be provided with a notice at least 90 days before the beginning of each plan year, or, for those who become eligible later or enroll after the beginning of the plan year, no later than the employee’s effective date of coverage.
9. ICHRAs will likely require annual reporting.
An ICHRA is a self-funded group health plan that may require coverage reporting. In addition, applicable large employers will need data captured about offers of coverage, enrollment, and cost of coverage for IRS Form 1094-C and Form 1095-Cs.
10. Continuation Coverage – ICHRAs are group health plans subject to federal COBRA.
Employers with 20 or more employees must offer ICHRA to individuals who loses eligibility due to a qualifying event (e.g. termination of employment, reduction in hours, a dependent aging out, divorce).
11. ERISA Documentation & Reporting – ICHRAs are group health plans subject to ERISA.
ICHRAs must have plan documentation, summary plan descriptions (SPDs) and a summary of benefits of coverage (SBC). The ICHRA may also be subject to annual Form 5500 reporting.
Reimbursement of §213(d) qualifying medical expenses, other than premiums or excepted benefits, prior to meeting the minimum deductible will make individuals ineligible to contribute to an HSA.
13. Nondiscrimination Rules – ICHRAs are self-funded group health plans subject to §105(h) nondiscrimination rules.
An ICHRA may differentiate amounts available by age or based on family size but cannot favor highly compensated individuals. If an employer also offers a self-funded traditional group medical plan, that plan must comply with §105(h) nondiscrimination rules. It might also be necessary to consider how the ICHRA offering impacts compliance with §125 nondiscrimination rules for cafeteria plans.
14. ICHRAs are available to employers of all sizes.
The ICHRA may be offered by employers of all sizes. Small employers may find it advantageous for different reasons than larger employers, and employer size may also impact the level and type of service required.
15. ICHRA Sales.
Some ICHRAs will be sold through brokers, while others may be sold directly to employers.
16. ICHRA Education.
The ICHRA is a new product option for brokers, employers and employees. Most will require a basic level of education to understand and use the product.
To complete this certification, you will need to submit documentation (e.g. screen shot from your system and/or a short explanation) to show how you are set up to handle a few of the key ICHRA requirements.