Individual Coverage Health Reimbursement Arrangement (ICHRA) plans are an alternative to traditional group health insurance. ICHRAs are a relatively new plan type that allow you to choose your own individual health insurance and get a tax-free reimbursement for premiums, qualified medical expenses and other out-of-pocket costs. Read on to learn more about this coverage option and how it can offer employees and employers a more flexible and affordable health benefits solution.

What makes ICHRAs different from other health insurance options?

Instead of offering a one-size-fits-all group health insurance plan, employers can give their employees a tax-free allowance to purchase their own individual health insurance. As an employee, you have more freedom to select a plan tailored to your family’s health needs.

How do ICHRA plans work?

1. Your employer will create a monthly reimbursement amount. This amount can vary based on your employment class (such as full-time, part-time or seasonal), age and number of dependents.
2. You’ll choose your own individual health insurance plan on the local market. The plan you pick must be ACA-compliant. This means you can’t choose a discount plan, health care sharing ministry plan, limited-benefits plan or critical illness plan.
3. Next, you’ll submit receipts for reimbursement. Your receipts must include the date the payment was made, the amount and a description of the service or product.
4. Your employer will reimburse you for qualifying expenses, typically through direct deposit or check.

What are the benefits for employees?

With an ICHRA plan, you have more health insurance options to choose from, giving you the flexibility to find a plan that works best for you and your family. Additionally, because the amounts your employer contributes are not wages and do not add to your gross income, ICHRA plans are a tax-free benefit. Any amount you owe above your employer’s contribution is also eligible for a pretax deduction.

Could ICHRA be right for your employer?

ICHRAs continue to grow in popularity among businesses of all sizes. If your employer is looking for solutions to control the cost of their benefits budget while meeting the diverse health needs of their employees, contact Sanford Health Plan at (855) 404-8445 (TTY: 711) to learn more about individual coverage HRAs.