With the changing landscape of how, where and when people work, providing health insurance options can’t be one-size-fits-all. Now, thanks to a special kind of health reimbursement arrangement, employers of all sizes can offer benefits to their employees, whether they are part-time, remote or seasonal.
Individual Coverage Health Reimbursement Arrangements hit the market in January of 2020 and allow employers to give tax-free reimbursements for insurance premiums and other medical expenses to employees that enroll in a health plan through the individual marketplace.
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ICHRAs can be a great resource for employers as they look to support employees’ overall wellness, but there are legal considerations organizations should keep in mind before offering this benefit. First of all, ICHRAs, like all HRAs, must comply with all of the general requirements applicable to traditional group health plans. For employers subject to Employee Retirement Income Security Act, this includes the written plan document, summary plan description and annual filings of Form 5500. In addition, ICHRAs are subject to other laws that apply to group health plans, such as COBRA and HIPAA. This is important to keep in mind because failure to follow the rules can result in regulatory penalties and litigation over benefits. In some cases, failure to follow the rules means there is no ICHRA.
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