ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is a type of health benefit arrangement that allows employers to reimburse employees tax-free for their individual health insurance premiums and qualified medical expenses.
Under an ICHRA, an employer sets up an account to reimburse eligible employees for their healthcare expenses. The employer decides how much money to contribute to each employee’s ICHRA account based on their budget and the coverage needs of the employee. The employee then purchases an individual health insurance plan and submits the premium to the employer for reimbursement.
The ICHRA was created as part of the Affordable Care Act (ACA) in 2019 as an alternative to traditional employer-sponsored group health insurance plans. It is designed to give employees more flexibility and choice in their healthcare coverage while still providing employers with a way to offer health benefits to their employees.
ICHRA rules can be complex and vary depending on the size and type of employer, as well as other factors. It is important to consult with a qualified healthcare benefits professional to determine if an ICHRA is the right choice for your organization and to ensure compliance with all applicable regulations.