An ICHRA moves the decision. It does not remove it.
An Individual Coverage HRA lets an employer fund individual market coverage instead of sponsoring a group plan. For some employers it is a genuinely better answer. For others it transfers the hardest part of the problem — choosing a plan and a network — onto employees who have never had to do it, and the employer still owns the compliance. The difference is almost entirely in the modeling and the administration.
The answer is in your census, not in a case study.
An ICHRA is priced off the individual market where each employee lives and ages. That makes geography and age distribution the whole question, and it is why the same design can be excellent for one employer and punitive for another down the road.
Where your people live
Individual market rates and networks vary sharply by county. A workforce spread across several markets can be well served; a workforce concentrated where the individual market is thin usually is not.
Age and family mix
Individual premiums rise with age, so an older workforce shifts cost onto exactly the employees least able to absorb it unless the allowance is designed to account for it. Families are where this becomes visible fastest.
What it does to the mandate
For an employer subject to the employer mandate, an ICHRA can satisfy it — but only if the allowance clears the affordability test. That test is an arithmetic exercise against the lowest-cost local plan, and it has to be run before the design is announced.
Classes, notices and dates. In that order.
The rules are specific and unforgiving, and most of the failures we see are procedural rather than strategic.
Employee classes
The permitted classes are defined in regulation — full-time, part-time, seasonal, geography and a short list of others. You cannot invent a class, and you cannot offer a group plan and an ICHRA to the same class.
The notice deadline
Ninety days before the start of the plan year. It is not a formality: employees need that window to shop the individual market and to understand that enrolling in the ICHRA affects their eligibility for a premium subsidy.
Substantiation
Employees must verify they have individual coverage, at enrollment and with each reimbursement. Administered properly this is routine. Administered casually it is the finding in an audit.
Employees moving to individual coverage need guidance, not an email.
Plan selection support
Real help comparing individual plans on network, drug coverage and total cost — the work your employees have never had to do and will do badly alone.
Subsidy interaction explained
An affordable ICHRA offer makes an employee ineligible for marketplace subsidies. Told clearly up front, that is a trade-off. Discovered later, it is a grievance.
A year-one support plan
Someone to call when a claim, an invoice or a reimbursement goes wrong in the first year, which is the year it will.
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.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Bloomfield Hills, MI 48304
248.370.8853
719.425.2649
281.404.5670
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