New Healthcare Coverage Options: Flexibility for Employers and Employees

Great news for employers that prefer to reimburse health care expenses for employees with or without a group health plan.

The federal government launched a new type of HRA, called the Individual Coverage HRA (ICHRA) on January 1, 2020. Under the new HRA rule, employees can choose an individual healthcare plan that works best for them and then you as an employer irrespective of your business size can reimburse them tax-free for health care expenses.

 The ICHRA is a great choice for many small businesses, let us see how it works:

 Some eligible classes of employees:

·   Full-time employees

·   Part-time employees

·   Seasonal employees

·   Salaried employees

·   Non-salaried employees

·   Temporary staffing firm employees

·   Employees in the same geographical area

·   Employees covered by a collective bargaining agreement, like a union

·   Employees who haven’t met the required group plan coverage waiting period

·   Nonresident aliens with no income in the United States

·   Any group of employees formed by combining two or more of the above classes

The ICHRA is a good choice for many small businesses as it allows employers to personalize the plan for employees and have control over their budget for benefits. The ICHRA is also tax-free for the business and the employees and employees can opt out if they have premium tax credits. This new plan offers more flexibility and there are no limitations on the basis of the size of the employer. If you are interested in the new ICHRA plan, start researching now as open enrollment begins November 1,2019.