Affordable ICHRA

The affordability of an Individual Coverage Health Reimbursement Arrangement (ICHRA) depends on several factors, including the employer's contribution, the employee's income, and the cost of health insurance coverage. Here's a brief overview of how affordability is typically determined with an ICHRA:

1. Employer Contribution: With an ICHRA, the employer provides employees a certain amount of money to help them pay individual health insurance premiums. The affordability of the ICHRA depends on the amount the employer contributes. If the employer contributes a significant portion of the premium, the coverage will likely be considered affordable.
2. Employee Income: The affordability of an ICHRA is also influenced by the employee's income. The Affordable Care Act (ACA) sets guidelines for affordability based on the employee's household income. For the 2023 tax year, employer-sponsored coverage is generally considered affordable if the employee's share of the premium for the lowest-cost self-only coverage option does not exceed 9.12%.
3. Health Insurance Premiums: The cost of health insurance coverage can vary based on location, the insurance provider, and the type of plan. The affordability of the ICHRA will depend on whether the employer's contribution is sufficient to make the available health insurance options affordable for the employee.

It's important to note that employees are not eligible for premium tax credits through the Health Insurance Marketplace if their employer offers an ICHRA that is considered affordable. If the ICHRA is not affordable based on the ACA's guidelines, employees may be eligible for premium tax credits to help offset the cost of purchasing coverage through the Marketplace.

Have questions about health insurance plan types?

Bronze Plans:

Bronze plans typically have the lowest monthly premiums but the highest out-of-pocket costs when you receive medical services. They usually cover about 60% of your healthcare expenses, while you are responsible for the remaining 40%. These plans are a good choice for individuals or families who expect minimal healthcare needs and want to keep their monthly premiums low.

Silver Plans:

Silver plans strike a balance between premiums and out-of-pocket costs. They cover around 70% of your healthcare expenses, leaving you responsible for 30%. Silver plans are a popular choice for individuals or families who want a moderate monthly premium and are willing to share some of the costs when they receive medical care.

Gold Plans:

Gold plans have higher monthly premiums than bronze and silver plans but offer more comprehensive coverage. They typically cover about 80% of your healthcare expenses, with you responsible for the remaining 20%. Gold plans are suitable for individuals or families who anticipate higher healthcare needs and are willing to pay higher premiums in exchange for lower out-of-pocket costs.