Individual Coverage Health Reimbursement Arrangement (ICHRA)
ICHRA is employer-funded health benefit that helps active employees pay for individual health insurance coverage and eligible medical expenses.
ICHRA Basics
Your employer may choose to offer an ICHRA if:
They are looking for an alternative to traditional group health insurance.
Employees want greater flexibility to choose the health plan that best meets their needs.
The organization has employees located in multiple geographic areas, making a one-size-fits-all group plan less practical.
The employer wants predictable healthcare costs while still providing valuable health benefits.
This approach gives employees more choice and control over their healthcare coverage while allowing employers to offer a flexible, customizable benefit.
With an ICHRA:
Your employer provides money to help cover healthcare costs.
You choose and enroll in your own individual health insurance plan.
You can be reimbursed for eligible health insurance premiums and, in some cases, qualified medical expenses.
An ICHRA may be offered instead of a traditional employer-sponsored group health plan.
How an ICHRA Affects Premium Tax Credits
Whether you qualify for Premium Tax Credits (PTCs) depends on whether your ICHRA is considered affordable.
Note: You can’t receive both ICHRA funds and PTCs for the same coverage.
If Your ICHRA is Considered Affordable
You aren’t eligible for PTC through the Health Insurance Marketplace.
You are expected to use the ICHRA benefit offered by your employer.
Even if you decline the affordable ICHRA, you generally can’t receive Marketplace subsidies.
If Your ICHRA is Considered Unaffordable
You may choose to opt out of the ICHRA.
You may apply for coverage through the Health Insurance Marketplace.
You may qualify for PTC if you meet all other eligibility requirements.
If You Accept the ICHRA
If you enroll in and use your ICHRA, you can’t receive PTC for the same months that you are covered by the ICHRA, regardless of whether the ICHRA is considered affordable or unaffordable.