Employers can decide who gets what contribution based on 11 different classes. Here we will discuss each class.
Individual Coverage HRA (ICHRA) is a very flexible and unique employer health plan. Employees can receive tax-free reimbursements for health insurance and medical expenses under an ICHRA. The employers can offer these reimbursements in numerous ways. We will examine the “employee classes” method in this article. Employers can use ICHRA to create classes and offer varying reimbursements to one or a combination of these classes. It allows employers to manage costs more effectively and offer their employees a comprehensive health benefit. Employers can offer an ICHRA to their entire workforce, just one class of employees, or some sort of combination. However, employers cannot offer a traditional group plan and an ICHRA to the same class.
Below is a description of each class:
- Full-time employees
Employers can define what this means but this is usually more than 40 hours a week. The minimum amount of hours for this class is 30 hours - Part-time employees
Again, employers have a little flexibility to determine the number of hours but it will usually fall into less than 40 or 30 hours. - Employees working in the same geographic location
Employees who live or work in the same rating area are included in this class. A rating area is determined by the county in which the employee resides or works. - Seasonal employees
An employee working for a specific period of time during a specific season, generally for six months or less. - Collective Bargaining Agreement Employees
A more sophisticated way of saying, union employees. - Employees who are in a waiting period before other coverage takes effect
Employees that just joined your company. Many employers wait up to 90 days before offering traditional benefits and ICHRA might be a great way to offer them benefits while they wait. - Non-resident alien employees with no U.S.-based income
This class is for employees that do not have US-based income including foreign employees who work abroad. - Salaried employees
Typically, an employee given a fixed income regardless of how many hours they work - Non-salaried employees (e.g. hourly workers)
An employee paid hourly for their work - Temporary employees
Temporary employees are contracted workers who perform a job for only a short amount of time. Think staffing agencies. - Any group of employees formed by combining 2 or more of these classes
Any of these classes can be combined to create a “super class” which allows for even more flexibility. You can further use ages and family size in each class to really drill down the reimbursements.