How to Set Up an ICHRA Plan: A Step-by-Step Guide for Employers
Setting up an ICHRA is straightforward, but there are important compliance steps. Here is your complete roadmap.
Key Decisions First
- Budget: How much per employee per month?
- Employee classes: Same amount for all, or different classes?
- Eligible expenses: Premiums only, or medical expenses too?
Step 1: Choose an Administrator
An experienced administrator handles plan documents, employee notices, reimbursement processing, and compliance tracking.
Step 2: Design Your Plan
Define employee classes (full-time, part-time, geographic, etc.) and set allowance amounts for each.
Step 3: Create Plan Documents
Required: eligible employee definitions, allowance amounts, eligible expenses, plan year dates, claims procedures, and HIPAA privacy notices.
Step 4: Provide Employee Notice
Written notice required at least 90 days before the plan year begins. Must include allowance amount, coverage requirement, opt-out rights, and tax credit impact.
Step 5: Launch
Collect proof of individual coverage, process monthly reimbursements, track usage, maintain compliance records.