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ICHRA for Dummies: An Instructional Blog

If you want to retain and recruit quality employees and clients, you’ll need to offer competitive benefits—it’s a no-brainer. The easiest way to do that? Offering ICHRAs. Now, if you don’t know what an ICHRA is, don’t worry. You aren’t actually a dummy. We’ve created a comprehensive “ICHRA for Dummies” guide to help simplify and streamline the basics of the elusive ICHRA. 

What Does ICHRA Stand For?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement

ICHRA Definition

An Individual Coverage HRA, or an ICHRA (pronounced “ick-ruh”), is an employer-funded Health Reimbursement Arrangement (HRA) that increases flexibility for both employers and employees to utilize the Individual Marketplace better. This HRA allows employers of any size or industry to reimburse employees tax-free for qualified medical expenses.

Basically, ICHRAs are the next best thing—and they’ve actually been around since 2020! But there was also a lot going on that year, so if you’re just now hearing about ICHRAs, that’s okay.

Why is ICHRA Important?

ICHRAs are important because they give both employers and employees more control and flexibility over health benefits. Not only are they flexible, but they’re different from traditional approaches—in all the best ways. Where traditional approaches are lacking, ICHRAs are abundant.

How Do ICHRAs Work?

Here’s a breakdown of the simple steps:

  • Employers put money into employees’ ICHRA accounts, like a bonus for your health.
  • Employees choose an insurance plan that suits them, and employers pay the monthly bill up to a certain amount.
  • Employees can use funds for eligible healthcare costs and should keep receipts handy!

What Are Some ICHRA Benefits?

  • Empowerment and Choice – Employees can choose the health insurance that meets their unique needs. 
  • Tax Benefits – Save on taxes! The money provided through ICHRAs isn’t subject to payroll or income tax.
  • Budget-Friendly – Companies can decide how much they want to contribute, giving them control over their healthcare budget. No more surprises!
  • Flexibility and Scalability – ICHRAs can be tailored to an organization’s size and needs.
  • Attract and Retain Talent – Increase your company’s appeal to current and prospective employees.

What Are Some ICHRA Rules?

  • Participants must have an Individual Policy to receive reimbursements.
  • Employees are required to receive an Initial Notice in advance.
  • Participants must prove that they are enrolling in an individual policy before employer contributions can be distributed. Employers must verify employee’s coverage status. 
  • Employers can limit ICHRA eligibility to certain classes.
  • The ICHRA must be defined within a formal document. HRA administrators must define the plan within a document accessible to employees and their dependents.
  • An ICHRA is a Self-Funded Group Health Plan and is subject to ERISA and IRS rules.

Contact Your #1 ICHRA Provider Today

If you’re ready to learn even more about ICHRAs, our health benefits experts are here to help. Remodel Health is the #1 ICHRA Provider, so you can rest assured you’re in qualified and capable hands regarding ICHRA administration. For a more detailed breakdown of all things ICHRA, check out our ICHRA 101 Guide.

To schedule a consultation with one of our health benefits experts, fill out this form!