Employers Now Have Employee Health Insurance Coverage Options

Employers offering an Individual Coverage Health Reimbursement Arrangement (ICHRA) can reimburse employees with pretax dollars to cover the cost of individual health insurance premiums and qualified medical expenses. ICHRAs first became available in 2020, preceded by qualified small employer health reimbursement arrangements (HRAs) in 2017. Until then, the Affordable Care Act (ACA) prohibited employers from reimbursing employees for individual market premiums. Employers determine how much they will reimburse employees via an ICHRA health insurance plan. The same terms must apply to all workers within a given class, though reimbursements may be increased for older employees and those with more dependents. Some ICHRAs may be more affordable options because employers set how much they’re willing to spend and because they provide flexibility for employers who don’t or can’t offer healthcare insurance due to the cost. Unfortunately, not all employees can purchase individual coverage through marketplaces or receive premium tax credits. The coverage employers offer must not meet the Affordable Care Act Affordability standards and ensure enough employees participate or it may become cost prohibitive. Depending on the marketplace offerings, employers will have to determine if the risk or change is worth it.

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