Individual Coverage HRA
Individual Coverage Health Reimbursement Arrangements (ICHRAs) are premium reimbursement arrangements that allow employers to reimburse employees for personal health insurance coverage they obtain on their own. Plans such as those offered on the Health Insurance Marketplace or Medicare plans are eligible for reimbursement.
Premium Reimbursement Arrangements (PRAs) can generally be described as tax-free programs which are offered by employers to reimburse employees for health insurance coverage they obtain on their own. Below is a summary of the most common PRAs.
The Employer Mandate requires employers with 50 or more employees to offer “minimum essential coverage” to at least 95% of its full-time employees. Failure to do so can result in a penalty of $2,570 for each full-time with a break on the first 30 employees. Most employers assume minimum essential coverage must come in the form of a traditional group health insurance plan, but that is not the case.
Individual Coverage Health Reimbursement Arrangements (ICHRAs) can be otherwise described as premium reimbursement plans. Employers establish a plan to reimburse employees for health insurance coverage they obtain on their own; either a plan obtained in the individual health insurance market or through Medicare. Reimbursements are tax-free to employees and tax-deductible to employers.
Individual Coverage Health Reimbursement Arrangements (ICHRAs) are new premium reimbursement arrangements that allow employers to reimburse employees for personal health insurance coverage they obtain on their own. Plans such as those offered on the Health Insurance Marketplace or Medicare plans are eligible for reimbursement. An employer may optionally choose to reimburse out-of-pocket medical expenses too.
If you’re familiar with the individual health insurance market, you should be aware that the Affordable Care Act (ACA) made significant changes to the application and enrollment processes starting in 2014.
The short answer is that they are both defined contribution plans.
The Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-sponsored defined contribution health plan whereas a 401(k) is a defined contribution retirement plan.
Join Our Mailing List
Benefits Buzz RSS Feed