Frequently Asked Questions about ICHRA

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With certain exceptions (including the age of employee and family size), an employer must offer the ICHRA on the same terms to all individuals within a class of employees. There are 11 exclusive employee class descriptions: 

• full-time 

• part-time 

• salaried 

• non-salaried (hourly) 

• seasonal 

• employees covered by a particular collective bargaining arrangement 

• non-resident aliens with no U.S.-based income 

• employees who have not satisfied waiting periods 

• temporary employees of staffing firms 

• employees working in the same insurance rating area (same geographic location such as state or multi-state region) 

• any combination of two or more of the classes previously mentioned 

The employer defines the contribution amount it will contribute, tax-free to the ICHRA. The amount can be as little or as much as the employer wants (no minimum or maximum contribution amounts are required). The contribution amount must be a fixed dollar amount. 

Option 1: Defined Contribution by Tier 

Contribution by tier is used when an employer wants to contribute to the total premium, including dependent premium cost. The employer determines their health benefit budget and sets a fixed contribution amount, giving equal  amounts to all employees regardless of age. 

Option 2: Defined Contribution by Relationship 

Contribution by relationship is used when an employer wants to contribute based on the people. An employer may specify fixed contribution amounts for the employee, the employee’s spouse, or the employee’s child(ren). 

Option 3: Percentage of Benchmark Plan by Relationship (age bands apply)

Benchmarking may be used to determine the fixed contribution amount. By using a percentage of a benchmark plan, an employer can “back into” a fixed dollar amount. However, the employer contribution must be a fixed dollar amount.