Is an Individual Coverage Health Reimbursement Account (ICHRA) Right for Your Company?

An ICHRA enables employers to allocate a fixed dollar amount to employees on a tax-free basis, which employees can use to purchase individual health insurance through the marketplace or private insurance providers. This arrangement provides a high degree of flexibility, allowing employees to choose the specific coverage that aligns with their unique health needs and family situations. For employers, this flexibility offers a valuable opportunity to design personalized benefit solutions that cater to a diverse workforce. By implementing an ICHRA, employers can offer a benefits strategy that provides value to employees while aligning with the company’s own financial and operational goals.

The first objective for a business owner is to assess whether an ICHRA is an appropriate fit for their organization. Unlike traditional group health plans, ICHRAs are often most advantageous for small to mid-sized businesses, or companies with a widely dispersed or diverse workforce. For example, in industries with high levels of seasonal or part-time workers, traditional group plans may be financially burdensome, especially if the employees have varying insurance needs. By evaluating the organization’s workforce composition, turnover rate, and budgetary considerations, decision makers can determine if an ICHRA makes sense.

One word of caution, there are complexities concerning ICHRAs that need to be fully understood before considering them as a part of any employee benefit package. It’s best to consult with a professional for advice and direction.

The Columbia-Montour Chamber of Commerce offers its members access to My Benefit Advisor as a solution for employee benefits, including voluntary offerings. For more information about My Benefit Advisor, visit our website at cmcc.mybenefitadvisor.com or contact Rob Higginbotham at (800) 377-3536.