If you’re considering the Individual Coverage Health Reimbursement Arrangement (ICHRA) for your organization, you might be curious about the types of expenses that are eligible for reimbursement under this arrangement. In today’s blog post, we’ll delve into the world of ICHRA-eligible expenses to help you and your employees make the most of this flexible healthcare option. If you’re new to ICHRA, check out our comprehensive ICHRA Guide!
Ready to uncover the details? Let’s explore the expenses that qualify for reimbursement under an ICHRA plan.
Individual Health Insurance Premiums
One of the primary purposes of ICHRA is to help employees cover the cost of individual health insurance premiums. Employees can use their ICHRA funds to reimburse premiums for individual health insurance policies purchased through the Health Insurance Marketplace, directly from an insurance carrier, or through a state-based exchange.
Qualified Medical Expenses
In addition to individual health insurance premiums, ICHRA funds can also be used to reimburse employees for qualified medical expenses as defined by IRS Section 213(d). These expenses include, but are not limited to:
- Prescription medications
- Doctor’s office visits and copays
- Dental care (excluding cosmetic procedures)
- Vision care (including eyeglasses and contact lenses)
- Medical supplies and equipment (such as crutches or wheelchairs)
- Mental health counseling
- Physical therapy
A comprehensive list of eligible medical expenses can be found in IRS Publication 502.
Medicare Premiums and Supplemental Policies
ICHRA can also be used to reimburse employees for Medicare premiums (Parts A, B, C, and D) and premiums for Medicare Supplement (Medigap) policies. This can be particularly beneficial for employers with an older workforce or for employees who are nearing retirement age.
Expenses That Are NOT Eligible for Reimbursement
It’s essential to note that some expenses are NOT eligible for reimbursement under an ICHRA plan. These expenses include:
- Group health insurance premiums
- Expenses that have been reimbursed by another source (such as an FSA or HSA)
- Over-the-counter medications without a prescription (except insulin)
- Cosmetic procedures (unless medically necessary)
- Health club memberships (unless prescribed by a doctor for a specific medical condition)
ICHRA provides a flexible option for employers to help their employees cover the cost of individual health insurance premiums, qualified medical expenses, and Medicare premiums. By understanding the types of expenses that are eligible for reimbursement, both employers and employees can maximize the benefits offered by an ICHRA plan.
As always, it’s a good idea to consult with a qualified benefits consultant when setting up your ICHRA plan to ensure you’re making the best decisions for your organization and remaining compliant.
Talk to a Remodel Health benefits expert to see if our ICHRA products are a good fit for you!
Important Notice: Remodel Health does not intend to provide specific insurance, legal, or tax advice. Remodel Health always recommends consulting with your own professional representation to properly evaluate the information presented and its appropriate application to your particular situation.