Individual Coverage Health Reimbursement Arrangement (ICHRA) Explained
ICHRA—A option for tax-free health reimbursement available 2020
- 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.