Group Health Insurance
Individual Coverage Health Reimbursement Arrangement
Beginning in 2020, some employers will have the option of reimbursing employees’ health insurance premiums by using an ICHRA as an alternative to providing a group health insurance plan. This change will provide a great deal of flexibility for both employers and employees, letting employers control costs while letting employees find a health insurance plan that will fit their lifestyle.
What Is an ICHRA?
An individual coverage health reimbursement arrangement, or ICHRA, is an employer-funded health benefit used to reimburse employees for healthcare expenses. With an ICHRA, businesses of any size can provide their employees with a monthly allowance of tax-free money that can be used to pay for approved health care services, including individual health insurance.
The Pros and Cons of ICHRAs
As with traditional employer-sponsored health insurance, ICHRAs have their positives and their drawbacks. If you’ll be purchasing health insurance using an ICHRA in 2020, talk to a health insurance agent for guidance.
Pro: ICHRAs are Tax-Free
The ICHRA is a formal IRS-approved benefit, meaning that neither the business nor its employees have to pay payroll tax on the money put into it. On top of that, the employee doesn’t pay state or federal income tax on it.
Con: Employees Aren’t Eligible for Premium Tax Credits
Part of what makes individual health insurance affordable, even for those with low income, is the premium tax credits that participants may be eligible for. However, if you’re an employee participating in the ICHRA, you are ineligible for those tax credits. On the flipside, if you qualify for tax credits and health insurance would be unaffordable even with the HRA allowance, you have the option of opting out of the ICHRA and using your premium tax credits.
Pro: It Provides More Options for Employees
When your employer is determining which health insurance plan they’ll offer to employees, chances are that your personal health needs aren’t factored in. With an ICHRA, you get to select a health care plan that provides the coverage that you and your family needs, rather than being stuck with whatever plan your employer opted for on a given year.
Con: It Doesn’t Provide Health Insurance Benefits to Everyone
Companies that offer health coverage through ICHRAs are unable to provide benefits to uninsured employees, those who are on their spouse’s health insurance plan or those who participate in a healthcare sharing ministry plan. Only those with individual health insurance and Medicare can participate in the ICHRA.
Nevada Insurance Enrollment Is Here to Help
If your employer will offer an ICHRA and you’ll be purchasing individual health insurance for the first time, you have access to free help. At Nevada Insurance Enrollment, we’ll help you find the best coverage for you and your family. Our health insurance agents help you review your health needs, determine your budget and find a plan that will fit your lifestyle. Our professional assistance comes at no cost to you, making it the simplest and most cost-effective option for finding great health insurance.
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Recent Posts
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What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.