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Switching Sides: Can You Move from QSEHRA to ICHRA (or Vice Versa)?

If you’re already offering QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) or ICHRA (Individual Coverage Health Reimbursement Arrangement) to your employees, you might be wondering if it’s possible to switch between these two options. In today’s blog post, we’ll explore whether you can make the transition from QSEHRA to ICHRA or vice versa and what you need to consider before making the change. If you’re new to ICHRA and QSEHRA, check out our previous blog post on the differences between the two.

Ready to dive into the world of HRA transitions? Let’s get started!

Switching from QSEHRA to ICHRA

Yes, you can switch from offering QSEHRA to ICHRA. However, there are a few things to consider before making the change:

Timing: When switching from QSEHRA to ICHRA, you should align the transition with the beginning of a new plan year to avoid confusion and ensure a smooth transition for your employees.

Employee Notification: You must provide your employees with a written notice at least 90 days before the start of the new plan year, informing them of the change from QSEHRA to ICHRA and any new terms and conditions.

Compliance Requirements: Keep in mind that ICHRA has different compliance requirements than QSEHRA, such as offering different terms to different classes of employees. Be sure to review and follow the ICHRA rules and regulations to ensure a compliant transition.

Switching from ICHRA to QSEHRA

It’s also possible to switch from offering ICHRA to QSEHRA. However, there are a few factors to consider before making the change:

Eligibility: Remember that QSEHRA is available only to small employers with fewer than 50 full-time equivalent employees who do not offer a group health plan. Make sure your organization meets these criteria before switching to QSEHRA.

Timing: Similar to switching from QSEHRA to ICHRA, it’s best to align the transition with the beginning of a new plan year.

Employee Notification: Notify your employees of the change from ICHRA to QSEHRA and any new terms and conditions by providing a written notice at least 90 days before the start of the new plan year.

Compliance Requirements: Keep in mind that QSEHRA has different compliance requirements than ICHRA, such as annual contribution limits set by the IRS. Be sure to review and follow the QSEHRA rules and regulations to ensure a compliant transition.

Yes, you can switch between QSEHRA and ICHRA or vice versa. However, it’s essential to consider factors like timing, employee notification, and compliance requirements before making the change. By carefully planning the transition, you can ensure a smooth and successful shift for your organization and employees.

Want to see if ICHRA or QSEHRA is a good fit for your organization? Connect with us!

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.