Individual Coverage Health Reimbursement Arrangement (ICHRA) Explained

ICHRA—A option for tax-free health reimbursement available 2022



  • Available to businesses of any size
  • Reimburses premiums and qualified medical expenses
  • No maximum contribution
  • Participants must have MEC
  • Participation is at the discretion of the employer based on employee classes. HRA can be designed to reimburse at different rates for different classes.
  • May be offered with a group plan, but employer can’t offer employees in the same class a choice between HRA and group plan.
  • Funds may roll over year to year.
  • Employees participating in the HRA aren’t eligible for premium tax credits if the ICHRA is considered affordable, but if the amount the employee must pay for a self-only silver plan (the lowest cost silver plan on the exchange) is greater than 9.86% of their household income, the ICHRA is considered “not affordable” and the employee may opt out of the ICHRA and choose the premium tax credit instead.