There have never been so many options for employers to provide health benefits to their employees. In 2020, a game changer arrived – the ICHRA. It is estimated to help hundreds of thousands of employees with over 800,000 employers adopt, but because it is still so new, questions arise every day. Let’s answer a common one…
“Can an employer offer a group health plan to their FULL-TIME employees and the ICHRA to their PART-TIME employees?”
The answer is: YES! But you cannot offer the same type of employees a choice between the group health plan and the ICHRA.
The BASE® Individual Coverage Health Reimbursement Arrangement is an IRS-approved tax savings plan that gives businesses, of any size, a great alternative for providing employees their health benefits. Employers have the ability to choose to offer to all employees, or to specific classes, with no contribution caps. With the ICHRA in place, employers are streamlining their benefit options, cutting costs without reducing the value of the provided health benefits, and are able to provide on different levels for all types of employees.
For the question above, the ICHRA allows the employer to define eligibility for the group health plan and the ICHRA by separating the employees into classes, and in this case, split the full-time employees and part-time employees. The employer can then provide the full-time employees with a group health plan and the part-time employees with the ICHRA, reimbursing them for their individual coverage and/or out-of-pocket medical expenses. Please note, class size minimums may be required.
With the ICHRA, there are many benefits to both the employer and employee. The employer can attract and retain employees with an increased benefits package when many businesses are unable to provide part-time employees with benefits. The employer has control of the funding limits with the freedom to choose the level of reimbursement, and all reimbursements are 100% deductible as a business expense. Employers can see real savings by not providing a traditional group health plan to any or all employees and enjoy peace of mind knowing that all plan administration is handled by BASE®. The ICHRA provides employees with additional money to help with the rising cost of health care and reimbursements received are considered nontaxable income.
The ICHRA helped to change the game by helping employers to avoid the “one-size-fits-all” approach when it comes to providing health care. For more information on implementing the Individual Coverage HRA into the business, call 888.386.9680 or visit www.BASEonline.com.