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What Are the Steps to Set Up an ICHRA? A Step-By-Step Guide for Employers

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If you’ve decided that the Individual Coverage Health Reimbursement Arrangement (ICHRA) is the way to go for your organization, you’re in the right place. Today, we’re walking through the steps to set up an ICHRA for employees. If you’re still weighing your options, check out our previous blog post, How does ICHRA differ from other healthcare options?

Ready to get started? Let’s dive into the ICHRA setup process!

Step 1: Determine Employee Classes

The first step in setting up an ICHRA is to define the employee classes for your organization. Examples of classes include full-time, part-time, seasonal, or employees based on geographic location. You can offer different levels of reimbursement or different coverage options to these classes, allowing you to cater to your employees’ diverse needs.

Step 2: Set Reimbursement Amounts

Next, you’ll need to decide on the monthly allowance you’ll provide for each employee class. This amount will be used by your employees to purchase individual health insurance policies and cover other qualified healthcare expenses. Remember, there is no maximum limit on employer contributions, but you must establish a cap on annual reimbursements for each employee class.

Step 3: Establish Plan Details

Once you have your employee classes and reimbursement amounts set, it’s time to outline the specifics of your ICHRA plan. This includes details such as the plan start date, the reimbursement process, and any rollover rules for unused funds. You’ll also need to develop a written plan document that outlines the ICHRA terms and conditions for your employees. At Remodel Health, we can simplify this complicated process and help you create a plan that fits your employees’ needs. 

Step 4: Communicate with Employees

Effective communication is crucial when implementing an ICHRA. Be sure to provide your employees with clear, comprehensive information about the ICHRA plan, including their eligibility, reimbursement allowances, and instructions for selecting individual health insurance policies. You’ll also need to give employees a notice of the ICHRA offering at least 90 days before the start of the plan year.

Step 5: Manage Reimbursements

Once your ICHRA plan is up and running, you’ll need to manage the reimbursement process. This involves verifying that employees have eligible health insurance coverage and processing their reimbursement requests for qualified healthcare expenses. To streamline this process, Remodel Health’s software offers tools and one-on-one customer support to help you manage your ICHRA plan efficiently.

Step 6: Stay Compliant

It’s essential to stay compliant with all applicable laws and regulations surrounding ICHRA, including ERISA, COBRA, and the Affordable Care Act (ACA). Be sure to consult with a benefits expert or legal counsel to ensure your ICHRA plan meets all necessary requirements.

Setting up an ICHRA for your organization involves defining employee classes, establishing reimbursement amounts, outlining plan details, communicating with employees, managing reimbursements, and ensuring compliance. By following these steps, you’ll be well on your way to providing a flexible, personalized health insurance option for your employees.

It’s always a good idea to consult with a qualified benefits consultant or legal counsel to ensure your ICHRA plan is set up correctly and in compliance with all regulations. 

Remodel Health’s team of health benefits experts can assist your organization with every step of the ICHRA process! 

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