An ICHRA is only as sound as the lines you draw between employees.
The rules let you offer different allowances to different classes, but only the classes the regulation lists, only on the same terms within each class, and only with notice delivered on time. An ICHRA problem usually traces back to a class drawn for convenience instead of drawn to the rule, so we start there.
The regulation lists the permitted classes. It does not let you invent new ones.
Classes are built from categories such as full-time, part-time, salaried, non-salaried, seasonal, collectively bargained and rating area, and they can be combined. We draw them to fit your workforce and your budget, then test them against the rule before anything is announced.
Full-Time and Part-Time
The simplest split and often the most useful. We confirm the definitions your payroll uses match the ones the plan document states, because a class defined one way in payroll and another way in the document is not a class you can defend. Our free ICHRA allowance budget calculator turns this into dollars for your plan.
Salaried and Hourly
A group plan for salaried staff and an ICHRA for hourly staff is permitted. We check the pay practice behind each label, so someone paid by the hour but coded as salaried in the payroll system does not land in the wrong class.
Rating Area
Geography can define a class when employees work in different rating areas, which makes it a common way to handle a multi-state workforce. We map every worksite to its rating area before the class is written. Rating area classes suit multi-state ICHRA plans.
New-Hire Subclass
You can offer an ICHRA to employees hired after a set future date while current employees keep the group plan. It allows a gradual move, and we plan the start date against your renewal. A new-hire subclass allows a gradual ICHRA transition while current employees keep the plan they know.
Mixing a group plan with an ICHRA triggers a minimum class size.
When some classes get a traditional group plan and others get an ICHRA, certain classes must meet a minimum size: 10 employees for an employer with fewer than 100 employees, 10 percent of employees for an employer with 100 to 200, and 20 for an employer with more than 200.
Why It Exists
The rule is there to stop an employer from moving a few high-cost employees off the group plan and into the individual market. That is why a small class can fail the test even when no one intended anything of the kind.
When It Does Not Apply
The minimum size does not apply when no class is offered a traditional group plan, and it does not apply to a new-hire subclass. We confirm which situation you are in first, because it decides how narrowly the classes can be drawn.
The Same-Terms Test
Within a class the allowance must be offered on the same terms. It may rise with family size, and with age so long as the oldest participant’s amount is no more than three times the youngest’s. Anything else needs a new class, not an exception.
The design is approved once. The compliance runs every plan year.
An ICHRA has to deliver notice, verify coverage and honor opt-outs every year it runs. We set up the calendar and the checks so each happens on time, not when someone remembers.
The Written Notice
Eligible employees must receive notice at least 90 calendar days before the plan year begins, or by the date the HRA takes effect for someone who becomes eligible later. The notice starts each employee’s shopping clock, so a late notice shortens the time they have to choose a plan.
Proof of Coverage
The HRA must verify that each participant is enrolled in individual coverage, at enrollment and with each reimbursement request. We run that verification through our platform, so reimbursements stop when the coverage behind them lapses. Coverage verification is a core ICHRA compliance step.
The Annual Opt-Out
Participants must be allowed to opt out and waive reimbursements once each plan year. That matters because accepting an ICHRA ends premium tax credit eligibility, so employees need to understand the choice before they make it. Clear opt-out communication is part of ICHRA compliance.
What employers ask about ICHRA classes.
Can managers get a richer allowance than staff?
Only if managers fall into a permitted class, such as salaried employees, and everyone in that class gets the same terms. A job title alone is not a class. Where a design is close to the line, your counsel decides, and we bring the facts.
Can employees choose between ICHRA and the group plan?
No. Within a class it is one or the other. Employees in an ICHRA class can decline the allowance, but they cannot elect your group plan instead. Clear class rules prevent confusion about who is offered the ICHRA and who is offered the group plan.
Does an ICHRA need a plan document?
Yes. It is an employer group health plan and carries the documents and disclosures that come with one. We make sure the plan document and summary are in place before the first reimbursement is requested. An ICHRA needs a plan document and summary plan description, like any other employer group health plan.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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