ICHRA
Individual Coverage HRA, explained
An ICHRA lets an employer reimburse employees for individual health insurance premiums and certain medical expenses instead of offering a traditional group health plan.
How it works
The basic structure
- 01
Define the arrangement
The employer sets the plan design, including employee classes and reimbursement amounts.
- 02
Communicate to employees
Employees receive the required notice and information about how the arrangement works.
- 03
Employees enrol
Employees obtain individual coverage that satisfies the arrangement's requirements.
- 04
Reimbursements are administered
Substantiation is collected and eligible amounts are reimbursed under the plan terms.
Potential benefits
- More predictable budgeting, because the employer sets the reimbursement amount.
- Flexibility for workforces spread across different regions or plan markets.
- Employees choose an individual plan that fits their own circumstances.
- Reimbursement amounts can be structured by employee class.
Implementation considerations
- Employee classes and reimbursement amounts must be defined before launch.
- Required employee notices and plan documentation must be issued.
- Employees need time and guidance to select individual coverage.
- Substantiation is required on an ongoing basis.
- Employers should review the arrangement with their own tax and legal advisors.
This page is general information about how ICHRAs work. It is not tax, legal or medical advice, and it is not advice about any individual's or employer's specific situation.
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