Article Date:
August 2023

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ICHRA: Game Changer for Small Business Health Benefits

The individual coverage health reimbursement arrangement (ICHRA) enables businesses of all sizes, from Fortune 500 corporations to small mom-and-pop shops, to reimburse employees for personal health insurance purchases1—and avoid the potential penalty of $100 per day for each employee that could otherwise be imposed.2


Example 1. Ben operates a business with seven employees. He offers an ICHRA that will reimburse employees up to $600 a month for health insurance and other medical expenses, provided they have qualifying health insurance. With the ICHRA:



Ben does not have to worry about the $100-a-day penalty, which—with his seven employees—could equal $255,500.


Ben knows his fixed cost of providing health benefits to his employees.


Know this. Because Ben has fewer than 50 employees, he does not have to provide any health benefits to his employees. The Affordable Care Act (ACA) requirement to provide health benefits applies to employers with 50 or more employees.3


Crazy, right? If Ben gives his seven employees no health benefits, he faces no possible penalties. But if Ben decides to give his employees benefits, he exposes himself to the $100-a-day penalty—per employee.


Solution. Ben uses the ICHRA to provide health benefits and avoid the penalty problem.


Possible Fly in the Ointment


The ICHRA is a creature of Executive Order No. 13813, dated October 12, 2017, and implemented by ... Log in to view full article.

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