Other Employer Design and Compliance Issues
- The ICHRA is a group health plan subject to ERISA plan documentation requirements (e.g. SPD and SBC) and Form 5500 filings, depending upon the size of the plan.
- The individual health coverage and Medicare integrated with the ICHRA are not subject to ERISA as long as:
- The employer must not select or endorse particular insurance carriers or coverage and cannot receive any financial incentive
- Participants must be provided an annual notice that the individual health insurance is not subject to ERISA.
- ICHRA participants must be permitted to enroll in any qualifying individual health coverage, on- or off-Exchange.
Benefit Nondiscrimination Rules:
- 105(h) – As with traditional HRAs, ICHRAs are considered self-insured health plans subject to §105(h) nondiscrimination rules.
- Employers who choose to offer an ICHRA to just some employees while maintaining a self-funded traditional group medical plan for another class of employees must be careful that the design does not result in the traditional group medical plan being considered discriminatory.
- 125 nondiscrimination rules –if employees are permitted to pay for off Exchange individual health coverage premiums pre-tax through the employer’s cafeteria plan these premiums must be considered in the employer’s Section 125 non-discrimination testing.
An ICHRA is a group health plan subject to federal COBRA continuation requirements.
If the ICHRA is designed to reimburse qualifying medical expenses other than individual health insurance premiums individuals enrolled in the ICHRA will not be eligible to contribute to an HSA.
Medicare Secondary Payer (MSP) Rules:
Employers are permitted to offer an ICHRA to individuals eligible for Medicare, and may also allow reimbursement of Medicare premiums without violating the MSP rules. However, an ICHRA cannot be offered only to Medicare eligible employees, or designed to limit reimbursements only to expenses not covered by Medicare.