Building a Strategy
Step 1: Determine Employee Classes
The first step in setting up an ICHRA is defining your organization's employee classes. Examples of classes include full-time employees, part-time employees, seasonal employees, or employees based on geographic location. You can offer different reimbursement levels and coverage options to these classes, allowing you to cater to your employees' diverse needs.
Step 2: Set Reimbursement Amounts
Next, you’ll need to decide on the monthly allowance you’ll provide for each employee class. Your employees will use this allowance amount to purchase individual health insurance policies and cover other qualified healthcare expenses. Remember, there is no maximum limit on employer contributions, but you must establish a cap on annual reimbursements for each employee class.
Step 3: Establish Plan Details
Once you have your employee classes and reimbursement amounts set, it’s time to outline the specifics of your ICHRA plan. This includes details such as the plan start date, reimbursement process, and rollover rules for unused funds. You’ll also need to develop a written plan document that outlines the ICHRA terms and conditions.
Step 4: Communicate with Employees
Effective communication is crucial when implementing an ICHRA. Be sure to provide your employees with clear, comprehensive information about the ICHRA plan, including eligibility, reimbursement allowances, and instructions for selecting individual health insurance policies. You’ll also need to notify employees of the ICHRA offering at least 90 days before the start of the plan year.
Step 5: Manage Reimbursements
Once your ICHRA plan is up and running, you’ll need to manage the reimbursement process. This involves verifying employees' eligibility for health insurance coverage and processing their reimbursement requests for qualified healthcare expenses.
Step 6: Stay Compliant
It’s essential to stay compliant with all applicable laws and regulations surrounding ICHRAs, including ERISA, COBRA, and the Affordable Care Act (ACA). Consult with a benefits expert or legal counsel to ensure your ICHRA plan meets the necessary requirements.