An Individual Coverage HRA gives employers of any size a smarter way to offer health benefits.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is an alternative to traditional group health insurance that allows employers of any size to provide more flexible and cost-effective health benefits to their employees.
Unlike a traditional group health plan, an ICHRA doesn’t require your company to select, negotiate, or manage a single insurance policy on behalf of your workforce. Instead, you set a monthly allowance, and each employee uses it toward the plan that fits their own life.
Looking for a solution designed specifically for small businesses with fewer than 50
employees? A QSEHRA (Qualified Small Employer HRA) may be a better fit.
The employer decides how much to contribute each month toward each employee’s healthcare costs. (Amounts are based on local individual market plans.)
Employees select an individual health insurance plan that fits their needs. With ICHRA, employees can shop, compare and enroll in plans right on our BEN360 platform.
Once employees enroll, we process everything behind the scenes and set up their monthly payments—so coverage stays active and everything runs smoothly without extra work on your end.
It’s easy to manage all your day-to-day changes in BEN360. From new hires and terminations to qualifying life events, everything is handled in one place with reliable support, year-round.
BEN360 is Benafica’s in-house ICHRA administration platform, built specifically to handle the compliance, reimbursement, and reporting demands of a well-run ICHRA.
This strategy ensures greater equity across your workforce.
This strategy can be simpler to understand but it can disadvantage older employees and those living in areas where insurance is more expensive.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It’s an employer-funded benefit that reimburses employees, tax-free, for qualifying individual health insurance premiums and sometimes out-of-pocket medical expenses.
ICHRA lets an employer set a defined monthly allowance that employees can use to buy individual health plans. Employees then submit proof of coverage and premiums and the employer reimburses up to the set amount. Any unused funds stay with the employer.
ICHRA itself is not an insurance policy, it’s a reimbursement arrangement. Employees must enroll in qualifying individual health insurance (on or off the exchange). The ICHRA then helps pay for that coverage, making it a way to finance real insurance, not a substitute for it. But it’s still a compliant way to offer full-coverage health insurance to your team.
ICHRA can be offered by any size employer. You need at least one W-2 employee. It can’t be used by owners only or for 1099 contractors.
Most employers start by looking at current benefits spend and local individual-market premiums for their employees’ ages and locations. From there, they choose an allowance strategy. With a flat-dollar strategy, you offer a flat amount to all your employees (or employees across a group). With an age-banded strategy, you offer a percentage of a targeted plan’s premium, such as 75% of a gold plan. We will help you model and adjust contribution strategies and define employee classes.
ICHRA can either be used to fully replace your traditional group health plan or you can offer it alongside a group plan for specific employee classes. For example, you might offer a group plan to full-time employees and an ICHRA to part-time employees.
ICHRA employee classes let employers offer different allowance amounts and eligibility rules to defined groups, such as full-time, part-time, salaried, hourly, different locations, etc. There are 11 different classes and they are set by IRS regulations. Employees in the same class must be treated equally. Learn more about ICHRA employee classes.
The biggest advantage of ICHRA for employers is it can help them add some cost control to their health benefits spend and avoid the volatility of group plan renewals. It also has no participation minimums, no minimum or maximum contribution mandates (unless you’re an ALE), and can scale more easily than group plans. Some cons are that networks can be smaller, and employees may need more education and guidance than with group plans. Partnering with a great administrator helps.
Employees benefit from more plan choices and getting to choose a plan that works for their actual health needs. On the downside, they may be subject to fluctuations of the individual market, which can change over time.
Yes, ICHRA can be offered to meet the ACA employer mandate, as long as an employee’s allowance is considered “affordable” under IRS rules. We will help you model affordability if you’re an ALE.
Employees shop for and choose an eligible health plan through our platform, BEN360. We enroll them in the plan and set up their monthly payments. We manage all the ongoing reimbursement and documentation in the platform, so you can always see what’s going on.
Talk to Benafica about setting up an ICHRA or QSEHRA for your business.
We’ll help you choose the right HRA type, design employee classes, and handle all the administration.
Call us at 651-287-3253 or fill out the form below.
