ICHRA Requirements for Reimbursement

There are no limits to how much a church can offer for reimbursement under ICHRA. This is a big difference from QSEHRA which has rather restrictive limits. With ICHRA, churches can offer as much or as little as they’d like as long as it’s offered fairly to each class.

In addition, employers can choose what they want their ICHRA to reimburse:

• Insurance Premiums Only
• Insurance Premiums + Qualified Medical Expenses
• Qualified Medical Expenses Only

“Qualified medical expenses” are defined by the IRS in publication 502. If you’re familiar with Health Savings Accounts (HSAs), this is the same list. It includes things like doctor visits, co-pays, prescriptions, medical equipment, dental procedures, etc. Employers can choose to only reimburse certain types of medical expenses (ie, only prescriptions) as long as whatever elections are made are offered fairly to employees.

Furthermore, churches can choose how to structure reimbursements to employees:

1. Give all employees the same amount: This one is easy. For example, you could give all employees $200/mo.
2. Vary reimbursements by family size: Since individual market plans cost more for families, employers can offer more for larger families. Unlike QSEHRA, it does not have to be tied to a reference plan but does have to be “reasonable”. For example, an employer could offer $200 for single employees, $300 for married employees, and $600 for employees with families. Or they could offer $100 for each additional dependent.
3. Vary reimbursements by employee age: Similarly, since individual plans typically cost more for older employees, employers can elect to offer higher reimbursement amounts to older employees. Reimbursements must be structured using a 1:3 ratio from the youngest to the oldest employee. We strongly recommend setting it using the age range from 21 to 64. For example, you could give a 21-year-old $100/mo and a 64-year-old $300/mo. 

ICHRA Employee Classes

The above ICHRA reimbursement rules can be applied to all employees, or churches can choose to create different reimbursement rules for different types of employees, referred to as employee “classes”. For example, you could offer one set of reimbursement rules to full-time employees and a separate set of rules for part-time employees. Classes cannot be used to discriminate. 

Still, have questions?
Contact Pro Advisor Support to answer your questions.

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