Article Date:
August 2023

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9 Insights on the Individual Coverage HRA for Small Businesses

Does your business have fewer than 50 employees?


Would you like to help your employees with some of their health insurance expenses?


If you answered “yes” to both questions, you should consider the individual coverage HRA (ICHRA) that you can learn about at ICHRA: Game Changer for Small Business Health Benefits.


You will likely find the ICHRA a superior alternative to the qualified small employer HRA (QSEHRA) because the ICHRA has far more flexibility, as you will see from the nine insights described below.


Insight 1: Application of the Class Size Rule


The class size requirement applies only if you (a) offer a traditional group health plan to at least one other class of employees and (b) offer an ICHRA to at least one class of employees.1


With no group health plan, you can have classes of employees, but you face no class size requirement.


Insight 2: Minimum Class Size Requirement (Example)2


If your business wants to offer some employees a traditional group health plan, you must meet the requirement for a minimum class size in order to use an ICHRA.




You have 16 employees.


You cover your four full-time employees with group health coverage.


You offer your 12 part-time employees coverage of $400 a month under an ICHRA.


Eight part-time employees accept the ICHRA; four employees decline. ... Log in to view full article.

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