ICHRA
Benafica helps employers design, launch, and manage Individual Coverage HRAs.
ICHRA OVERVIEW
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 for small businesses? Try QSEHRA
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.
POWERED BY BEN360
BEN360 is Benafica’s in-house ICHRA administration platform, built specifically to handle the compliance, reimbursement, and reporting demands of a well-run ICHRA.
Option 1
This strategy ensures greater equity across your workforce.
Option 2
This strategy can be simpler to understand but it can disadvantage older employees and those living where insurance is more expensive.
ICHRA is available to employers of any size. You need to have at least one W-2 employee.
Employees must enroll in qualifying individual health insurance (on or off the exchange) that meet ACA minimum essential coverage. Leftover ICHRA dollars can also be used to reimburse out-of-pocket expenses.
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.
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.
What happens to an employee’s premium tax credit eligibility when they get offered ICHRA or QSEHRA dollars? Learn more about how each HRA coordinates with premium tax credits and things you should consider as an employer before you implement a plan.
As federal efforts to codify ICHRA stalled in Congress, several states have begun pursuing their own solutions. Connecticut has become the latest state to adopt a state-level ICHRA tax credit. Here’s a look at the states leading the way and those worth watching.
As healthcare costs continue to rise, many employers are rethinking how they offer benefits. If you’ve found yourself questioning whether traditional group health insurance is still the right fit, you’re not alone—and there are alternatives worth exploring.
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.
