An ICHRA is a group health plan under federal law, which brings real requirements. None is complicated on its own — the risk is missing one. Here's the full list.
Before the plan starts
1. A written plan document and summary plan description
Private employers' ICHRAs are generally ERISA plans, so they need a written plan document setting out the terms, and a summary plan description (SPD) employees can understand.
2. The employee notice — at least 90 days ahead
Every eligible employee must get a written notice at least 90 days before the plan year starts. New hires get it no later than the day they become eligible. The notice has required content, including the allowance, how the ICHRA affects premium tax credits, and the employee's right to opt out. The Department of Labor publishes a model notice.
3. Consistent classes and amounts
Allowances must be the same within each class, varying only by age (up to 3:1) and family size, and class-size minimums apply if you also offer a group plan. The contribution rules in full.
Every year
4. An opt-out opportunity
Employees must be able to opt out of the ICHRA annually before the plan year starts — and when they're first offered it mid-year.
5. Coverage verification
You need reasonable procedures to confirm that participants and any covered family members have qualifying individual coverage: typically an attestation at the start of the plan year, and confirmation with each reimbursement request.
6. Keeping the individual policies out of ERISA
The individual policies employees buy stay outside your ERISA plan only if you stay hands-off: you don't pick or endorse an insurer, employees choose freely, and you remind them each year that their individual coverage isn't part of your plan. The model notice covers that reminder.
Ongoing administration
7. Reimbursements and records
Process reimbursements for eligible expenses up to each person's allowance, and keep records of the plan, notices, attestations and payments.
8. Privacy
Because an ICHRA is a group health plan, the health information it handles is protected under HIPAA. Whoever administers reimbursements needs appropriate safeguards.
Requirements that depend on your size
| Feature | Applies when | What it involves |
|---|---|---|
| Employer mandate and affordability | 50+ full-time equivalents | ICHRA must be affordable to avoid potential penalties |
| ACA reporting (Forms 1094-C / 1095-C) | 50+ full-time equivalents | Report the ICHRA offer to employees and the IRS |
| COBRA | Generally 20+ employees (state rules may apply below) | Offer continuation of the ICHRA after qualifying events |
| PCORI fee | Generally applies to ICHRAs | Small annual per-participant fee, filed on Form 720 |
| Form 5500 | Generally 100+ participants | Annual return; smaller unfunded plans are usually exempt |
This is a summary of federal rules, not legal advice. State law can add requirements, and your situation may differ — confirm specifics with benefits counsel or your tax adviser.
Sources
- HealthCare.gov — CHOICE Arrangements (for employers)
- U.S. Department of Labor — Individual coverage HRA model notice
- 26 CFR 54.9802-4 — Special rule allowing integration of HRAs with individual health insurance
- CMS — Individual Coverage HRA frequently asked questions (PDF)
General information, not tax, legal or insurance advice. Rules change and individual situations differ — confirm specifics with your tax adviser or benefits counsel.