Child care centers staff teachers, aides and directors on different schedules and pay. An ICHRA lets each class have its own allowance.
Under an individual coverage HRA, a child care center can give salaried directors, hourly teachers and aides, and part-time or seasonal staff their own allowances. Most of the effort goes into defining the classes, checking affordability for lower-paid roles and setting a plain waiting period.
Why child care centers look at an ICHRA.
Salaried and Hourly Classes
Directors on salary and hourly teachers or aides land in different permitted classes, and every person within one class gets the identical allowance.
Each Center Can Be Its Own Rating Area
If your centers sit in more than one rating area, each area can carry its own allowance. The calculator reveals what each location costs.
Part-Time and Seasonal Classes
Part-time employees and people hired for summer programs can form a separate class with a separate allowance.
Turnover Gets a Known Cost
Turnover in this field is high, and a fixed monthly allowance for each class means you know in advance what every new hire will cost in benefits.
A Waiting Period for New Hires
You may delay the start of the allowance for a new hire by as much as 90 days, provided the same waiting period is applied to everyone in that class.
A Different Option from Group Health
An ICHRA can stand in for the group plan or sit alongside it for certain classes. Which is right turns on participation and cost.
The center issues that decide whether it works.
Affordability for Lower-Wage Roles
Because wages are lower, the employer must contribute more to pass the affordability test, so run the numbers for aides and assistant teachers before anyone else.
Staffing Ratios and Scheduling
Centers staff to required ratios, so hours and headcount shift with enrollment. Model allowances against realistic staffing, not one average.
Plan Choice Near Each Center
Employees purchase individual plans in the market where they live, so check which carriers and networks are available near each center.
Employee Shopping Experience
A lot of teachers and aides have never purchased an individual plan, so someone has to guide them through the marketplace and the steps for getting reimbursed.
Notice and Timing
Notice to eligible staff has to arrive 90 or more days before the new plan year, so begin counting from the effective date.
Seasonal and Variable-Hour Staff
Staff for summer programs and after-school care must be classified clearly, because the classification feeds both the allowance and the reporting.
What to settle before moving a center to an ICHRA.
Which roles are in which class?
Write down every role together with its status: full-time or part-time, salaried or hourly.
Which centers are in which rating area?
Before you set allowances, record the address of each center and the rating area it falls in.
What does enrollment drive?
Model staffing at high and low enrollment, not one average.
Who helps employees buy a plan?
Name who will field questions during the first enrollment and when they will be available.
Does every class pass affordability?
Each class has to pass on its own merits, since a single class that fails is a compliance problem.
Is the center independent or part of a group?
Ownership affects how employees are counted and which rules apply, so review it with counsel.
The questions child care and early education centers ask about ICHRAs.
Can a child care center give directors and teachers different allowances?
Yes, provided the groups are permitted classes, such as salaried versus hourly or full-time versus part-time. Treat all employees in a given class identically.
Can summer and after-school staff be a separate class?
Both seasonal and part-time employees are permitted classes and can be given their own allowance. Have counsel review how the classes are defined.
How does lower pay affect the affordability test?
The affordable dollar amount drops as pay drops, which usually means entry-level roles need the largest contribution. Check those classes first.
Can a group of centers set different allowances for each location?
Yes. Employees in different rating areas can be placed in different classes, and every employee in a class must be treated the same.
Does a new hire have to wait before the allowance starts?
A waiting period is permitted, capped at 90 days, and everyone in the class must be subject to it equally.
What notice do employees need?
Send eligible staff a written notice ahead of the plan year, no later than 90 days before it opens, and count backward from the effective date.
Should a center keep its group plan?
Some centers hold onto it for one class and use an ICHRA for the rest, while others move off it entirely. It comes down to cost, participation and how the classes are drawn, and we model both routes.
Nothing here is legal or tax advice. It is an overview of how individual coverage HRAs work; questions tied to your own plan belong with ERISA counsel and your tax advisor, and we will involve them.
Where these details come from.
Summarizes public guidance as reviewed in October 2026. Requirements change, so verify the current rules with counsel.
CMS: Individual Coverage HRAs →
U.S. Department of Labor: Employee Benefits Security Administration →
More ICHRA guides for other workforces.
ICHRA for Home Health and Social Services
Field staff and variable schedules.
ICHRA for Medical and Dental Practices
Clinical staff, owners and associates.
ICHRA for Restaurants and Hospitality
Tipped, hourly and seasonal staff.
ICHRA for Michigan Public Employers
Boards, unions and Public Act 152.
ICHRA for Local Service Businesses
Small crews across many trades.
ICHRA by Industry
Compare all seventeen workforces side by side.
Send us your renewal.
You get our view on whether the renewal looks competitive, where we spot room to improve, and five questions to raise with your carrier. It costs nothing and you are not obligated to switch anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, or six when your group has 50 or more employees. We ask for nothing beyond that, since each extra item is just another reason to delay.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →