Frequently Asked Questions

An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to reimburse employees tax-free for individual health insurance premiums and medical expenses. Instead of buying a group plan, the employer gives employees money to buy their own coverage — and in 719 US counties, this costs 20-62% less than small group insurance.

Any employer, regardless of size — from a single employee to thousands. LLCs, S-Corps, C-Corps, nonprofits, and government entities can all offer ICHRA. There are no industry restrictions. The only rule: you cannot offer group insurance and ICHRA to the same class of employees.

No. Unlike QSEHRA (which has annual caps), there are no limits on employer contributions to an ICHRA. Employers can contribute as much or as little as they want per employee class.

ICHRA became effective on January 1, 2020, through a joint rule by the IRS, Department of Labor, and HHS. It was designed to give employers a flexible, affordable alternative to traditional group health insurance.

Savings vary by county. In 719 US counties across 18 states, employers can save 20-62% compared to small group health insurance. The highest savings are in Ohio (up to 62.3%), Georgia (up to 55%), and Indiana (up to 48%). Use our savings map to check your specific county.

Under the ACA, individual and small group markets are rated differently. In many counties, individual market competition has driven premiums lower, while small group rates remain high due to different risk pools, administrative costs, and fewer carrier options.

Yes. Employer contributions are tax-deductible business expenses. Employee reimbursements are completely tax-free — no income tax and no FICA/payroll taxes on ICHRA amounts. This provides additional savings beyond the premium difference.

Yes. Employees choose their own individual health plan, so they can select one that includes their preferred doctors, hospitals, and specialists. This is actually an advantage over group plans, which limit everyone to the same provider network.

The employee keeps their individual health insurance plan. They simply stop receiving ICHRA reimbursements and pay the full premium themselves. There is no COBRA requirement for ICHRA, and there's no gap in coverage.

If the ICHRA offer is "affordable" (the employer's contribution covers enough of the premium), the employee cannot receive ACA premium tax credits. If it's not affordable, the employee can opt out of ICHRA and qualify for marketplace subsidies instead.

ICHRA setup typically takes 1-2 weeks for plan design and documentation. However, employers must provide employees with at least 90 days written notice before the plan year begins. So plan ahead — most employers start the process 4-5 months before their desired start date.

Yes, but not to the same class of employees. For example, you can offer ICHRA to part-time workers and group insurance to full-time workers, or ICHRA to employees in one state and group insurance to employees in another.

Employees purchase individual health insurance, submit proof of coverage to their employer or ICHRA administrator, and receive tax-free monthly reimbursements up to their allowance amount. Most administrators provide a simple online portal for this process.