Why Do Employers Choose ICHRA?
- Cost Predictability: Set a fixed monthly budget to minimize the burden of premium increases
- Flexible Design ⚙: Offer different allowances for full-time, part-time, or remote employees
- Tax Advantages:
- Employers: 100% of contributions are tax-deductible
- Employees: Reimbursements are tax-free when enrolled in a qualified plan
- Simplified Administration: No group plan renewals or minimum participation requirements
- Ideal for Remote & Multi-State Teams: Employees can select coverage in their own state of residence
Why Employees Like ICHRA
- Greater Choice: Freedom to choose a plan that fits their personal and family needs
- Portability: Coverage can continue even after leaving the company
- Tax Benefits: Employer reimbursements are received tax-free
How Does ICHRA Work? (3 Steps)
- Employer Sets the Budget – Monthly allowance is determined per employee
- Employee Buys Coverage – Must purchase an ACA-compliant individual health insurance plan
- Reimbursement – Employee submits proof of payment, and the employer reimburses tax-free
Can Business Owners Use ICHRA?
- C-Corp Owners: ✅ Yes. Treated as W-2 employees, they can benefit from ICHRA for themselves
- S-Corp, Sole Proprietors, Partnerships: ❌ No tax benefits for the owner personally, but they may still offer ICHRA to their W-2 employees
Which Companies Are a Good Fit for ICHRA?
- Businesses wanting to control and fix their health benefits budget
- Companies facing steep group health insurance renewal rates
- Employers with remote or multi-state employees
- Organizations seeking to give employees more choice and flexibility in their health coverage