Individual Coverage Health Reimbursement Arrangement (ICHRA)

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a type of employer-funded health benefit that allows employers to reimburse their employees for premiums and other qualified medical expenses.

Unlike traditional group health insurance plans, ICHRA gives employees the flexibility to purchase individual health insurance coverage that best suits their needs and budget.

With an ICHRA, employers can set aside a fixed amount of money each month to reimburse employees for their individual health insurance premiums and other eligible medical expenses.

Employees can then choose any individual health insurance plan available on the open market or through the healthcare exchange in their state. This allows them to select a plan that aligns with their specific healthcare needs, preferred healthcare providers, and desired coverage levels.

ICHRA offers several advantages for both employers and employees. For employers, it can provide:

• Cost savings compared to traditional group health plans, and
• It allows them to offer a valuable health benefit without the administrative burden of managing a group plan.

For employees, ICHRA offers:

• Greater flexibility and choice in selecting their healthcare coverage, while also
• Providing tax advantages since the reimbursements are excluded from their taxable income.