A premium ICHRA (individual coverage health reimbursement arrangement) is an employer-funded plan that reimburses employees for individual health insurance premiums. ICHRAs give employees the freedom to choose their own health insurance plan.
Health plan requirements
To participate in a premium ICHRA, you must purchase and maintain individual health insurance that provides minimum essential coverage. You cannot be enrolled in a group health plan.
You must provide proof of coverage (insurance card or policy documents) to your employer.
How to get reimbursed
Purchase your individual health insurance policy and pay the premiums out-of-pocket first. Submit proof of premium payments with documentation for reimbursement up to your available allowance.
Eligible expenses
You can submit for reimbursement premiums for individual health insurance coverage, including:
Individual Health Insurance Premiums
Marketplace plans (ACA-compliant)
Private individual health plans purchased outside the Marketplace
Medicare Premiums
Part A (Hospital Insurance)
Part B (Medical Insurance)
Part C (Medicare Advantage)
Part D (Prescription Drug Coverage)
Medicaid Premiums
Only if the individual is enrolled in a Medicaid plan that requires premium payments (varies by state)
COBRA Premiums
Continuation coverage from a previous employer
Dental and Vision Insurance Premiums
If separately purchased and not part of a bundled employer plan
Student Health Insurance Premiums
If ACA-compliant and meets minimum essential coverage standards
Ineligible expenses
You cannot use your premium ICHRA for out-of-pocket medical expenses like deductibles, copays, or prescriptions.
Spending limit
ICHRAs must be funded by employers; employees cannot contribute to ICHRAs. (Thanks boss!)
Your employer sets a monthly allowance amount.
Rollover
Your employer decides whether unused ICHRA funds roll over to the next plan year. There's no legal requirement either way, so check your plan details.
Taxes
ICHRA employer contributions and employee reimbursements are not subject to federal income tax, Social Security tax, or Medicare tax.
If reimbursed for insurance premiums through your premium ICHRA, you cannot include those premiums in your medical expenses when filing your taxes.
Ownership
Premium ICHRA funds belong to your employer. If you leave your job, you lose access to your ICHRA. Your individual health insurance policy remains yours—you'll just pay the premiums yourself going forward.
Other benefits
Premium ICHRAs are compatible with HSAs, allowing you to enjoy both benefits if you have HSA-eligible health insurance. Limited-purpose FSAs (dental/vision only) are also compatible with ICHRAs.
Standard health FSAs are not compatible with ICHRAs.
Double dipping
You cannot submit a claim for the same premium expense to multiple tax-advantaged accounts. If your benefits administrator determines you've submitted duplicate claims, they will ask you to pay back the overpayment.