ICHRA Plan document requirement
All benefit plans must have a written plan document to qualify for tax-favored treatment of premium payments, contributions, and reimbursements. This is in the IRS rules for all HRAs, including the individual coverage model. The plan document states all of the information about the plan including how it works, amount of benefits, who sponsors the plan (employer), who administers the plan (sponsor or agent), and all of the legal information required by the IRS, DOL, and ACA. It is a fairly complex document, and that’s why we’re here. Our plan document package provides everything an employer needs to establish a tax-saving benefit plan in one convenient and affordable package for only $199, and that’s a one-time fee, not an annual subscription.
Before ordering
But first, there are some decisions an employer has to make about their individual coverage HRA, so it can be stated properly within the ICHRA plan document.
Free plan design consultation
As you read more about the options (below), detailing the HRA may seem a little daunting at first. Make it easy by taking up our offer of a complimentary, no-obligation plan design consultation. We hope you will contact us, or send your questions in an email.
PLAN DESIGN OPTIONS
Define employee classes
The best way to begin is by defining the classes of employees that will be used in the ICHRA to further decide plan benefits. As explained in Same Terms (under ICHRA rules), classes can be set by several criteria and combinations of criteria. Will part-time employees be eligible to participate? What about seasonal or temporary workers? Will the company grandfather existing employees under the current traditional health plan while new hires are provided the ICHRA? Do participants with more dependents receive a higher benefit? Some elements of a plan can have a variance within the same class (a higher benefit for older workers is one example) while most other differences in benefit terms and amounts have to be assigned separate classes. All of this is covered in detail in the Same Terms rule section.
Decide on plan specifics
Once you have set up the employee classes, set the plan rules for them. The individual coverage HRA is the most flexible of all plan models. The employer provides all the funding, so the employer makes pretty much all the choices in plan design. Here are just a few of the options available to employers sponsoring an ICHRA (all can vary by employee classification group):
Amount of HRA benefit per year
With no minimum or maximum funding limit set by the rules, the HRA benefit amount is entirely up to the employer.
Pre-funding
The annual HRA benefit can be made fully available to participants on the first day of the plan year, or credited on a monthly basis.
Rollover option
What happens to unused funds at the end of the year? It’s up to you.
Coverage limits
Generally, an ICHRA will reimburse for all eligible medical expenses, but a company can set parameters so that the HRA only reimburses for the individual health coverage premium integrated with the plan, or for the premium plus only post-deductible expenses (for participants with Health Savings Accounts).
Determine plan year dates
Like all HRAs, individual coverage models run on a 12-month plan year. Just when that plan year begins and ends is up to the employer. Most plan years begin January 1 and end December 31; however, it can be any 12-month period. Some companies correlate the HRA plan year with their fiscal or tax year begin and end dates.
A short plan year is available for the first period. For example, a first plan year beginning March 1 and ending December 31, with all future plan years beginning January 1 and ending December 31. This can help an employer who wants a standard calendar plan year but is not able to begin a new ICHRA until later and similar circumstances.
ICHRA non-calendar plan years and open enrollment periods
Every year, Americans are permitted to make changes to individual coverage health plans during the health insurance open enrollment period that runs (usually) November 1 through December 15.
This is the only time of the year that health insurance can be purchased unless the participant or a covered dependent has a qualifying life event that opens a special enrollment period. For the first plan year of an ICHRA, this is not a problem because a special enrollment period exception is made for participants gaining access to an ICHRA for the first time. However, participants wanting to make a change in their individual coverage provider in later plan years will only be able to do so during the standard insurance open enrollment period. It is not required but may be helpful for employers on non-calendar plan years to formally remind employees of the open enrollment period prior to the January 1 that falls within the HRA plan year so that any wanting to change their individual health coverage will not miss the opportunity.
Cancel existing GHP
Companies that presently sponsor an employee group health plan and do not plan to grandfather it for existing employees must cancel the policy prior to the start of the ICHRA plan year (January 1, 2020, or after).
Ordering your plan document package
The ICHRA plan document package is available for only $199. Contact us to get your copy or for more information.
No annual fee
Our ICHRA plan document packages come to you for a one-time fee. There's no required renewal or subscription fee. You only pay for an update when one is needed, and then at a reduced price.
Fast service
You may choose either the standard electronic delivery service (.pdf) or a deluxe version that adds a printed binder for your convenience. Either way, the .pdf comes to you quickly, usually within the same business day.
Launch your Individual Coverage HRA
Our IC-HRA plan document package includes:
-
Signature-ready ICHRA plan document;
-
Corporate resolution to adopt an Individual Coverage HRA;
-
Summary Plan Description (SPD)
-
Individual Coverage HRA Notice
-
Employee election form;
-
Annual substantiation of coverage form;
-
Ongoing substantiation of coverage (for reimbursement requests); and,
-
Administrative handbook.
1. Sign the plan document in the two places indicated
Keep it on file and available in case of an IRS audit, the DOL requesting a copy, an employee asking to view the document, and for administrative guidance. The ICHRA plan document is not filed with the IRS, DOL, or any other government entity.
2. Distribute to every eligible employee, at least 90 days before the start of each plan year:
-
Individual Coverage HRA Notice;
-
Summary Plan Description;
-
Employee election form; and,
-
Annual substantiation of coverage form.
Prepare for success: employees
The success of your ICHRA will depend in part on its acceptance by the employees eligible to participate. Telling an employee that the company will reimburse them for their purchase of individual health coverage may not be enough to get a high rate of buy-in, especially for individuals who have not looked into buying health insurance before now. Buying individual health insurance is just as daunting (if not more so) than shopping for a group health plan. You can improve your chances of successful participation in the ICHRA helping employees with where to start and how to learn more by sharing just a little bit of information with them.
Written notice exchange information
The required written notice informs employees that they need to purchase individual health coverage from either the exchange or open market, and HHS promises additional resources to help individuals offered an ICHRA understand the concept of the ACA affordability provision and how that determines eligibility for a premium tax credit if they opt out of the ICHRA. This promised help will also address coverage dates, the annual enrollment period, and special enrollment periods. There is no promise in the rules about helping employees with making a decision on purchasing individual health coverage.
Company may not sponsor or endorse
Employers are forbidden by law to sponsor or endorse specific individual health coverage providers, agents, or plans. However, an employer may provide general information on how to find a provider or agent, or what to look for in an individual health coverage policy.
© 2022 Insurance Masters. All rights reserved.