Michigan public employers answer to boards, bargaining units and Public Act 152. An ICHRA has to be designed around all three.
A city, township, county, school district or authority can use an individual coverage HRA with allowances set by permitted class. In Michigan, Treasury guidance treats HRA reimbursements as counting against the Public Act 152 limits, which means any design begins with the cap election and the bargaining agreements.
Why Michigan public employers look at an ICHRA.
Salaried and Hourly Classes
Salaried administrators sit in one permitted class and hourly clerical or public works staff in another; every member of a class gets the same allowance.
Rating Areas Across a District
An entity that covers more than one rating area may set a separate allowance in each. The calculator prices out every area.
Union Employees Can Be a Separate Class
A bargaining unit governed by its own agreement can be treated as a class on its own. Have counsel review each agreement before you decide.
Budget Certainty for a Board
A fixed allowance per class gives a board a known annual cost to approve. Model it against the contribution limits before the vote.
A Waiting Period for New Hires
The allowance can begin up to 90 days after hire, and the same waiting period has to apply to the whole class.
A Different Option from Group Health
An ICHRA can stand in for the group plan or sit beside it for certain classes. Participation, cost and the bargaining picture decide which is better.
The public sector issues that decide whether it works.
Affordability for Larger Employers
Public employers with 50 or more full-time equivalent employees need an offer that passes the affordability test. Look at each class, not the average across all of them.
Public Act 152 Counts the Allowance
Treasury guidance counts HRA reimbursements toward the hard cap and the 80 percent limit. Model the allowance against whichever option the board elects.
Plan Choice Across the Jurisdiction
People buy individual plans where they live, so examine carriers and networks across the whole area where your employees live and work.
Employee Shopping Experience
Few public employees have ever shopped for individual coverage, so someone should guide them through the marketplace and the reimbursement process.
Notice and Board Timing
Written notice must go out at least 90 days ahead of the plan year, and board action on contributions runs on its own schedule. Line the two up.
Part-Time and Seasonal Staff
Part-time clerks and seasonal public works crews need a clear classification. It drives both the allowance and the reporting.
What to settle before moving a public employer to an ICHRA.
Which cap option applies?
Confirm whether the unit uses the hard cap, the 80 percent limit or an exemption, and how the allowance counts.
Which employees are covered by an agreement?
List every bargaining agreement and its health benefit terms before drawing class lines.
When does the board act?
Match the notice date to the board calendar so approvals come before the notice.
Who helps employees buy a plan?
Pick the person who will take questions during the first enrollment and the times they will be available.
Does every class pass affordability?
Each class must pass on its own; a single failing class is a compliance problem.
What happens to retirees?
Retiree coverage is handled separately, so review it with counsel before including retirees.
The questions Michigan public employers ask about ICHRAs.
Does an ICHRA allowance count toward the Public Act 152 limits?
Treasury guidance says HRA reimbursements count toward the hard cap and the 80 percent limit. Confirm how your unit should apply it with counsel.
Can a public employer use an ICHRA?
An ICHRA is open to employers of all sizes. Governmental use should be confirmed with counsel alongside Public Act 152 and board approvals.
Can union employees be a separate class?
Yes. A unit under a particular collective bargaining agreement may be its own class, though counsel should read each agreement first.
Does a local unit have to follow Public Act 152?
The act applies to local units of government, which may exempt themselves for the next year by a two-thirds vote of the governing body. Confirm the current rules for your unit.
Does a new hire have to wait before the allowance starts?
You can apply a waiting period of up to 90 days, provided it is the same for the whole class.
What notice do employees need?
Each eligible employee should receive the written notice at least 90 days before the plan year opens, so subtract from the start date to find your deadline.
Should a public employer keep its group plan?
Some public employers retain the group plan for one class and give another an ICHRA, and others replace the plan altogether. Cost, participation and class design settle it, and we model each option.
The material here is an overview of individual coverage HRAs, not legal or tax advice. For plan-specific questions, ERISA counsel and your tax advisor are the right resources, and we will involve them.
Where these details come from.
Based on public guidance reviewed in October 2026. Because rules change, verify current requirements 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 Child Care and Early Education
Teachers, aides and school-year schedules.
ICHRA for Medical and Dental Practices
Clinical staff, owners and associates.
ICHRA for Construction and Skilled Trades
Union carve-outs and mobile crews.
ICHRA for Professional Services
Partners, associates and support staff.
ICHRA by Industry
Compare all seventeen workforces side by side.
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