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TOPIC: Understanding ICHRA Class Structure |
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QUESTION |
What are ICHRA employee classes and how do they work? |
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ANSWER |
An Individual Coverage Health Reimbursement Arrangement (“ICHRA”) is a health insurance plan that allows employers to reimburse employees for qualified medical expenses. Employers designate employee classes that are eligible to participate in the plan, bifurcating their eligibility structure. In this way, the employer can maintain tradition group health plan coverage for certain classes, while extending ICHRA eligibility to other classes. § ICHRA classes help employers prioritize their health benefits budget, employee classes separate employees into groups by legitimate job-based criteria like hours worked or location. § ICHRA are flexible because an employer can administer them alongside traditional group health plan lines of coverage. § Employers may offer one class of employees a group health plan and another class of employees an ICHRA. § The primary caveat is that employers cannot offer employees in the same class (say full-time employees) the choice between a traditional group health plan or ICHRA. § Each class must have only one benefit offering: the traditional group health plan or the ICHRA. |
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ACTION |
Employers should evaluate their group coverage needs and assess whether an ICRHA may adequately compliment their group health plan offerings. |
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DETAILS |
For more information, contact the Baldwin Regulatory Compliance Collaborative. |
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Available ICHRA Class Structures |
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Class Structure |
Description |
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Fulltime Employees |
To satisfy the employer mandate, full-time employees must work at least 30 hours a week, but the exact definition can be determined by your business. |
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Part-time Employees |
Depending on the employer’s needs, this can be defined as those employees working less than 30 or 40 hours a week. |
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Seasonal Employees |
Employees who are hired on a short-term basis or for a particular season. |
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Collective Bargaining Agreement |
This includes employees who are part of a collective bargaining agreement (“CBA”), which is a written agreement between an employer, employee, and their trade union respecting the terms of employment, pay rate, work hours, and other working conditions. |
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Employees in a Waiting Period |
New employees can have a waiting period before their health benefits start. |
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International Employees |
Foreign employees working abroad, including non-resident aliens with no US-based income. |
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Employees in the Same Geographic Location |
This applies to employees in the same insurance rating area, state, or multi-state region. |
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Salaried Employees |
Employees who receive a salary as wages. |
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Hourly Employees |
Employees who do not receive a salary as wages, but instead are paid on an hourly service basis. |
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Temporary Employees |
Employees brought on for specific and temporary needs. |
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Combined Group |
The employer may design a custom class consisting of a combined group of any two of the foregoing classification groups. |
For more information
We’re ready when you are. Get in touch and a friendly, knowledgeable Baldwin advisor is prepared to discuss your business or individual needs, ask a few questions to get the full picture, and make a plan to follow up.
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