What is ICHRA?

ICHRA stands for "Individual Coverage Health Reimbursement Arrangement." It is a type of health benefit arrangement that allows employers to offer their employees a healthcare allowance to purchase their own individual health insurance coverage, rather than providing a traditional group health insurance plan.

Under an ICHRA, the employer sets a defined amount of money that each employee can use to purchase their own health insurance coverage. Employees can then use these funds to buy coverage that meets their individual needs and preferences. This can be particularly helpful for small businesses or those with varying employee populations, as it allows for more flexibility in providing health benefits.

The ICHRA was created under the 21st Century Cures Act, a federal law enacted in 2016 that aimed to accelerate the development and approval of medical treatments and cures, improve mental health care, and combat the opioid epidemic, among other things.

One of the provisions of the 21st Century Cures Act allowed for the creation of the ICHRA as a new type of health benefit arrangement. The law recognized that traditional group health insurance plans can be costly and inflexible, especially for small businesses and employers with varying employee populations.

The ICHRA was designed as a way to provide more flexibility in offering health benefits, while also giving employees more control over their healthcare choices. The law allowed employers of all sizes to offer ICHRAs starting in 2020, and provided guidelines for how the plans should be structured and administered.

The ICHRA has been viewed as a way to help increase access to healthcare coverage, particularly for individuals who may not have access to traditional group health insurance plans. It has also been seen as a way to give employees more choice and control over their healthcare, while still providing a valuable benefit from their employer.