Are your clients interested in an ICHRA? Below is important information agents should know when working with ICHRAs.
In this article, we will cover the following questions regarding ICHRAs:
What is an Individual Coverage HRA (ICHRA)?
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is an alternative to offering a traditional group health plan to employees. An ICHRA allows employers to reimburse their employees for individual coverage insurance premiums in place of offering them a traditional group health plan.
ACA agents should know that an employer cannot offer group coverage and an ICHRA to the same employee. When you work with an employer client in setting up an ICHRA for their employees, your client can offer group coverage to some and ICHRA to others by separating their headcount into classes of employees (e.g. full-time employees, part-time employees, salaried employees, employees covered by a collective bargaining agreement, seasonal employees etc).
Why ICHRAs can be beneficial for your BOB
Through an ICHRA, an employer gives tax-free dollars to eligible employees who then choose their own individual plans through the Marketplace. This new and giant market provides a unique sales opportunity to grow and expand your book of business. ICHRAs are quickly gaining in momentum because they can be a win-win for your employer clients and their employees: your employer client gets to control their health spending costs by moving away from traditional group coverage, while their employees get to choose the health insurance coverage that best fits their needs.
Additional benefits for your employer clients include:
Offers a more personalized plan choices for employees
Providing a simpler and more flexible plan design options
Require less administrative work
Employees like knowing that, should they choose, they can continue their same plan through the Marketplace if they experience a change in employment down the road
How is ICHRA “affordability” determined?
HealthSherpa has incorporated ICHRA affordability calculations directly into the application — so this can be determined directly on our site. To ensure your employer clients meet the minimum affordability requirements, we highly recommend that agents use our ICHRA Affordability Calculator to get an instant affordability report and understand what ICHRA contributions are necessary for your clients to meet the Affordable Care Act’s affordability thresholds.
In order for an ICHRA contribution to be deemed “affordable” by Marketplace standards, the monthly premium of the lowest-cost silver plan (LCSP) for the employee ONLY, minus the ICHRA contribution amount, should not be greater than 9.61% of the employee’s total monthly household income. If it is greater than this threshold, the employee has the option to opt out of the ICHRA and, if eligible, get a subsidy (APTC/CSR).
See the diagram below for a visual representation.
Where do agents fit within the ICHRA process?
As an agent, your role in an ICHRA implementation is to assist in the establishment of an ICHRA for your employer clients and facilitating the enrollment for their employees.
This may include: assisting your employer client in determining the employee contribution amounts, providing your employer client with your direct agent marketing link & direct contact information, in addition to any ICHRA educational materials that may be helpful to your employer clients and their employees.
With HealthSherpa, your employer clients will be able to provide a seamless enrollment experience for their employees through your branded website, as well as tools to help them make payments, upload documents, and use their insurance after enrolling.
You’ll also have ICHRA details in your agent dashboard that will give you visibility to the ICHRA business you are writing along with any follow-ups necessary for that client.
How do I process ICHRA’s on HealthSherpa?
An ICHRA application follows the same process as a Marketplace application, except you will have to include additional information about the ICHRA. We have uploaded a training video which provides a step-by-step process of how to fill out an on-exchange application through the HealthSherpa platform for a client who is offered an ICHRA. This video can be accessed here.
Frequently Asked Questions (FAQ):
Can subsidies be combined with an ICHRA?
No, an employee must either take a subsidy or elect ICHRA. Importantly, if the employee chooses to take the subsidy, they must opt out of their ICHRA entirely and waive the employer contribution – it is not possible to “double dip” and use the ICHRA dollars for some other expense (e.g. dental/vision).
If an employee has already chosen to opt in to the ICHRA, they cannot qualify for a subsidy – so it is important that the employee checks their eligibility first before they enroll.
Can ICHRA dollars be used towards on-exchange plans and off-exchange plans?
Yes. To participate in the ICHRA, an employee must be covered by an individual health insurance that is either purchased on or off of the Marketplace. A policy may also be purchased from private, State-based exchange.
Can ICHRA dollars be used towards ancillary plans like dental?
Generally, yes. The plan sponsor (your employer clients) may design the ICHRA to cover 1) insurance premiums only or 2) both insurance premiums and qualified medical expenses.
Eligible qualified medical expenses can include medical, dental, vision and other eligible plans. Those and other eligible expenses are outlined in IRS Publication 502 (IRC Section 213(d). Link: 2019 Publication 502 (irs.gov). Please see page 9 for eligible insurance plans. Many types of indemnity plans are excluded.
Does ICHRA eligibility qualify as an SEP?
Yes. The SEP applies to people who are offered the ICHRA for the first time, but it also applies to employees who either had (or were offered) ICHRA coverage in the past, ceased that coverage (or turned it down), and are then offered it again – either during the employer’s annual enrollment period, or because the employee switches to a different class of employees, which changes the employee’s eligibility for coverage under the ICHRA.
Does losing an ICHRA qualify for a SEP?
Yes, the loss of an ICHRA qualifies eligible consumers for an SEP.
When can an Employee change their plan?
Generally employees may change their individual health insurance coverage during the regular, annual open enrollment period. The Annual Open Enrollment Period (OEP) typically runs from November 1st through December 15th. Some state exchanges may provide additional time to enroll.