Article Date:
October 2019

Word Count:



New Individual Coverage HRA Turns the Clock Back to Pre-ACA Health Care Options

The Section 105 medical reimbursement plan was a great option for small businesses that wanted to provide health care coverage to their employees—until Obamacare destroyed much of the benefit by requiring the plans to provide Affordable Care Act (ACA)-compliant minimum essential coverage.1


Given the choice of offering non-compliant coverage and being subjected to a $100 penalty per day per employee,2 or offering no health coverage (an option for employers with 49 or fewer full-time employees3), most sane small employers chose the latter.


The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) was introduced in 2017. It took some of the sting out by allowing employers with fewer than 50 employees to reimburse certain health care costs, up to a set dollar limit, without fear of the $100-per-day-per-employee penalty.4


And while the QSEHRA option remains on the table for small employers, there’s now an even better option available to employers of all sizes.




Starting January 1, 2020, employers can offer a new type of HRA called the Individual Coverage HRA, or ICHRA.5


The ICHRA allows you to



reimburse (free of payroll and income tax) employees’ individual health care premiums and other permitted medical expenses,6 up to a dollar limit you choose—not one imposed by the government;


offer a regular group health plan (or not—it’s your choice) to certain employees and ICHRAs to other employees;


let employees pay for coverage, beyond the amount you reimburse, via a cafeteria plan if those employees have off-Exchange7 individual insurance coverage;


offer higher reimbursement levels to older workers and workers with more dependents;


allow employees to roll over excess ICHRA funds from year to year, without limitation; and


help employees out with their health care costs without fear of running afoul of the ACA and its dreaded $100 per-employee-per-day penalty.


Read on to find out if an ICHRA could be right for your business, and if so, how to get the ball rolling. ... Log in to view full article.

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