Starting January 1, 2020 employers can offer a new HRA called the Individual Coverage HRA, or ICHRA. This allows you to reimburse (tax free) employees’ health care premiums and other medical expenses, up to a dollar limit you choose. You can also offer a regular group health plan to certain employees and ICHRAs to other employees. You can even offer higher reimbursements to older workers and workers with more dependents.
ICHRAs are only available to employees who have an individual Exchange coverage, other individual insurance coverage, or Medicare.
You can even offer a group health plan to some classes of employees and the ICHRA to other classes. Classes can be based on certain factors (we can provide a list). If you are offering a traditional group health plan to some employees and the ICHRA to other employees, there are minimum class sizes, depending on the number of employees you have.
There is a notice which must be given to employees before November 1 (annually) if you want your ICHRA effective on January 1, 2020. (We can provide a model notice).
The law requires certain requirements be met, including: a) employee’s purchase of health insurance is voluntary, b) the employer does not endorse any specific insurance, c) all plan participants are notified annually that their individual health insurance coverage is not subject to ERISA.