Top five questions brokers are asking about ICHRA
As Individual Coverage Health Reimbursement Arrangements (ICHRA) continue taking on greater relevance in the health benefits world, questions about them continue to rise. And we’re here to help answer them. Here are some of the most common questions we see from brokers and their employer clients.
Before diving in, let’s start with a quick ICHRA 101 crash-course: ICHRAs are an employer-funded, tax-advantaged solution that allow employers to reimburse employees for individual health benefits and certain uncovered medical expenses. They also reduce administrative efforts by employers, while still supporting employees’ health care needs.
Now that you know the basics, let’s get into the details. The following are some of the most frequent questions we field about ICHRAs and how we’re helping brokers and employers navigate this innovative solution.
1. What is the eligibility criteria?
A primary focus for brokers and employers is understanding ICHRA eligibility and defining employee classes. Employers can offer ICHRA to specific segments of employees, such as full-time, part-time, seasonal, or geographically based employees, allowing them to tailor benefits to the needs of a diverse workforce.
In partnership with brokers, we also guide employers in assessing how factors like access to other employer-sponsored plans or government programs, such as Medicaid or Marketplace subsidies, impact employee eligibility. For example, employees receiving Marketplace subsidies may lose those subsidies if they choose an ICHRA. Brokers play a critical role in setting up eligibility correctly and ensuring ACA compliance.
2. How do ICHRAs compare to other HRAs, and what flexibility do they offer?
The key difference between ICHRA and other solutions such as Qualified Health Reimbursement Arrangements (QHRA) and traditional Health Reimbursement Arrangements (HRAs) is the flexibility. ICHRAs let employees pick health plans that best meet their healthcare needs. QHRAs and HRAs are usually better for small businesses, but ICHRAs can be tailored to businesses of any size.
ICHRAs have no set contribution limits, enabling employers to tailor reimbursements across different employee classes based on their specific needs. This flexibility is a valuable advantage for employers looking to reduce administrative involvement while offering employees more choice in their health plans.
3. What are the tax and compliance implications of ICHRAs?
A key advantage of ICHRA is their tax benefits. Employer contributions to an ICHRA are tax-deductible as a business expense, which helps companies reduce their tax liability. For employees, reimbursements made through an ICHRA are tax-advantaged, making this solution financially beneficial for both employers and employees. However, employers must comply with ACA requirements, including meeting specific affordability criteria and ensuring minimum essential coverage (MEC).
4. How do employers determine and manage contribution amounts?
A common question brokers and employers pose is in regards to establishing ICHRA contribution amounts. Employers have flexibility in this arena and can even set different amounts for different employee classes. It’s wise to consider regional insurance costs as well as overall goals and employee satisfaction. Gravie partners with brokers to help employers design a contribution strategy that fits their budget, while still ensuring compliance with regulations related to varying contributions for different employee classes.
5. How should you educate employees on ICHRAs?
Health benefits can be complex, and many employees feel anxious and confused about their options and their chosen health plan. Clear communication and streamlined enrollment processes are critical ICHRA functions different than traditional group health benefits. Employees need guidance on using ICHRA to purchase individual health plans and understanding its tax benefits. Gravie helps brokers in educating employers and employees through an extensive library of webinars on the basics of ICHRA, hybrid solutions, and common myths about ICHRAs. Through providing clear, easy-to-understand information, employees can confidently navigate their health benefits options and get the most from their ICHRA.
This year, Gravie has also introduced its Easy Enroll shopping platform for a majority of plans available. With Easy Enroll, members only need to complete a few simple steps to enroll in their individual plan – helping narrow down the number of plans to just those that best fit their needs.
Long before the arrival of ICHRAs, Gravie has been at the forefront of the individual market, now with an industry-leading platform that simplifies the entire ICHRA process—from onboarding and payment management to ongoing employee support. And brokers are essential in guiding employers through ICHRA setup, compliance, and communication with employees. Together, we’re connecting employers and their employees with tailored, tax-advantaged coverage that provides greater choice, cost control and comprehensive support from start to finish.