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Flexible, Modern Health Benefits with ICHRA

Flexible, Modern Health Benefits with ICHRAFlexible, Modern Health Benefits with ICHRAFlexible, Modern Health Benefits with ICHRA

Get the best health coverage for your needs today!

Flexible, Modern Health Benefits with ICHRA

Flexible, Modern Health Benefits with ICHRAFlexible, Modern Health Benefits with ICHRAFlexible, Modern Health Benefits with ICHRA

Get the best health coverage for your needs today!

ICHRA Defined

A smarter solution for delivering employee benefits without the financial uncertainty.

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a modern alternative to traditional group health insurance. Established in 2020, ICHRAs allow employers of any size to provide their employees with a tax-free monthly allowance to spend on individual health coverage and qualified medical expenses. Employees then choose the plan that best fits their needs, purchase coverage, and submit proof of expenses for reimbursement — giving them flexibility and control over their healthcare. 


For employers, ICHRA removes the complexity of managing group plans while offering budget predictability and compliance with the Affordable Care Act. Businesses can set different allowance levels for different classes of employees, tailoring benefits to their workforce. For employees, ICHRA means choice, portability, and coverage that fits their unique situation. 

ICHRA Rules

Rule 1: Individual Coverage Required

Rule 1: Individual Coverage Required

Rule 1: Individual Coverage Required

Employees must be enrolled in an individual health insurance plan to receive reimbursements. Eligible coverage includes on-exchange or off-exchange policies, Medicare Parts A, B, or C, and even family plans where the employee is listed as a non-primary policyholder.

Rule 2: Advance Employee Notice

Rule 1: Individual Coverage Required

Rule 1: Individual Coverage Required

Employers must provide a written notice to employees at least 90 days before the plan year begins. This notice explains eligibility, employer contribution amounts, and how ICHRA participation affects premium tax credits.

Rule 3: Proof of Coverage

Rule 1: Individual Coverage Required

Rule 4: Employee Classes Allowed

Before reimbursements are issued, employees must verify that they have qualified individual coverage. Employers must collect and review proof of coverage or employee attestations to stay compliant.

Rule 4: Employee Classes Allowed

Rule 6: Compliance with ERISA and IRS

Rule 4: Employee Classes Allowed

Employers can offer ICHRA to specific groups of employees instead of all employees. The IRS allows 11 defined classes, such as full-time, part-time, seasonal, geographic location, or union status, but ICHRA and group coverage cannot overlap for the same group.

Rule 5: Formal Plan Documents

Rule 6: Compliance with ERISA and IRS

Rule 6: Compliance with ERISA and IRS

Every ICHRA must be outlined in a formal plan document accessible to employees. A simplified Summary Plan Description (SPD) must also be provided — within 90 days of enrollment for new participants and within 120 days of the plan's creation for all eligible employees.

Rule 6: Compliance with ERISA and IRS

Rule 6: Compliance with ERISA and IRS

Rule 6: Compliance with ERISA and IRS

ICHRAs are considered self-funded group health plans and must follow ERISA and IRS regulations. This includes required employee communications and nondiscrimination rules to ensure fair treatment across the workforce.

How It Works

Our Vision

Delivering health benefits through an ICHRA is straightforward. Here's the simple four-step process:

1. Design Your Plan - As the employer, you set the rules by defining reimbursement amounts and employee eligibility.

2. Employees Choose Coverage - Each employee selects the individual health insurance plan that best fits their personal or family needs.

3. Submit Expenses - Employees submit eligible expenses, such as premiums or medical costs, according to your plan design.

4. Reimburse Employees - You approve claims and reimburse employees with tax-free dollars, up to the allowance you've set.

About WalletDoc

Our History

Our Expertise

Our Expertise

Since our founding, we've focused on helping businesses simplify health benefits. With the introduction of ICHRA in 2020, we've been at the forefront of making this modern, flexible solution accessible to employers of all sizes.

Our Expertise

Our Expertise

Our Expertise

Our team combines deep knowledge of benefits administration, compliance, and IRS regulations with hands-on experience supporting employers and employees nationwide. We make ICHRA administration simple, compliant, and effective.

Our Coverage

Our Expertise

Our Coverage

We proudly serve companies across the United States, supporting both small businesses and large organizations with distributed workforces. Wherever your employees are located, we make sure their ICHRA benefits work for them.

The modern solution that gives your business control and your employees choice.

Frequently Asked Questions

HRAs have long helped businesses reimburse employees for healthcare, but the ACA limited their use for individual plans. In 2017, new guidance paved the way for greater flexibility, and by 2020, ICHRA became a modern solution, giving employers of all sizes more control and employees more choice.


A third-party administrator makes it easy for employers to stay compliant, manage reimbursements, and streamline the benefits experience for employees. They handle everything from documentation and reporting to claims processing and issuing reimbursements.


It's straightforward: ICHRA administration lets employers manage costs while giving employees the freedom to choose the health coverage that fits their needs.


Unlike traditional group health plans, ICHRA has no minimum participation requirement. Employers can offer the benefit even if only a small number of employees enroll.


Advantages:

  • Employees gain more freedom to choose the coverage that fits their needs.
  • Employers maintain better control over healthcare spending.
  • Reimbursements are tax-free for both employers and employees.
  • Plans can be designed to remain fully compliant with regulations.
  • Employers can tailor benefits by defining different employee classes.

Considerations:

  • Employees are responsible for selecting their own coverage, which may require extra support or guidance.
  • Plan availability can vary by region, and some individual markets may have fewer options. 
  • Employers must establish and oversee the reimbursement process, though partnering with a compliant benefits administrator is highly recommended to simplify this step.


ICHRA

  • Reimburses individual health insurance premiums as well as qualified medical expenses. 
  • Operates under its own set of compliance and regulatory rules, distinct from traditional HRAs.


Traditional HRA

  • Commonly linked to a group health plan.
  • Cannot be used to reimburse employees for individual insurance premiums.


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