The ICHRA: Is it a Game Changer?

Businesses now have a new way to provide health coverage for their employees. The “ICHRA”, which stands for Individual Coverage Health Reimbursement Arrangement, is a company-funded, tax-advantaged health benefit used to reimburse employees for individual health insurance premiums and other medical expenses. The ICHRA became available on January 1, 2020.

What is the ICHRA?

The ICHRA is a health benefit for employers of all sizes that allows businesses, nonprofits, churches, and other groups to reimburse employees tax-free for qualified medical expenses.

But how does it work?

With an ICHRA, the business offers employees a monthly allowance. Employees then choose and pay for individual coverage, and their company reimburses them up to their allowance amount. All reimbursements are free from both payroll tax and income tax. The ICHRA process can be broken down into six steps:

  1. Businesses choose who is eligible to participate.
  2. Businesses set the allowance.
  3. Employees buy health care.
  4. Employees attest to having individual health insurance.
  5. Employees submit proof of purchase.
  6. Businesses review and reimburse employees’ premiums.

The ICHRA can be used to pay tax free for Individual or Medicare premiums.

Why Does it Matter to you?

Small, medium and large business’s will be asking how the ICHRA works and with over 11 million employees expected to move to the ICHRA in the next few years, it’s up to every advisor to stay on top of new legislation so that they can talk fluently about ICHRA. The ICHRA has the potential to significantly change how health insurance is paid for in the United States.

Minneapolis is seen as the number one city for having the right conditions for the ICHRA take off in the United States, followed by Los Angeles and Boston.  The main contributing factors to this include premiums, competition and other economic factors.

As the ICHRA becomes more widely known and understood, there will be additional opportunities for those who can adjust to the new rules, potentially leading to traditional advisors facing challenges with logistics, revenue and technology if not prepared.

By having knowledge of the ICHRA, you will not only be able to explain to your current clients why remaining on their current plan may be the right choice, you will also be able to prospect for new customers who want you to discuss with them all of their options, and why the ICHRA may be something they are very interested in. There will be employers across the United States jumping at the chance to get out of the health insurance business, and offering a defined contribution alongside an ICHRA may be appropriate to achieve companies goals.

What Should you Do?

Join LeClair Group for one of our workshops on the ICHRA to learn how it works so you have all the information needed to identify the right strategy for your business.  These workshops will also look at QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) plans.  Knowledge is power and these workshops will offer solutions and identify partnerships to ensure your success in these new markets. You need to defend and grow your practice.

Space is limited so sign up to ensure you have a place reserved at these workshops.

Event and registration details below.

Dates and Locations

Saint Louis Park – March 3, 2020
1:00pm – 4:00pm
Minneapolis Marriott West
9960 Wayzata Blvd
Saint Louis Park, MN 55426
Woodbury – March 10, 2020
9:00am – 12:00pm
Sheraton St. Paul Woodbury
676 Bielenberg Drive
Woodbury, MN 55125

Topics to be covered:

  • Overview of the ICHRA and opportunities for Employee Benefit Brokers.
  • Compliance
  • Strategies for how to implement the ICHRA

Whether you work in the Group, Medicare or Individual markets you should attend this game-changing workshop.