A dependent premium ICHRA (individual coverage health reimbursement arrangement) is an employer-funded plan that reimburses employees for health insurance premiums for their eligible dependents.
Health plan requirements
To participate in a dependent premium ICHRA, your eligible dependents must be enrolled in individual health insurance that provides minimum essential coverage. They cannot be enrolled in a group health plan.
Individual health insurance is purchased directly from an insurance company or through the Health Insurance Marketplace. The policy is in the individual's name, not provided by an employer. Group health plan is health insurance provided by an employer to employees as a workplace benefit.
Dependents
Your employer defines eligible dependents for your ICHRA. Generally, this includes:
Your legal spouse or domestic partner
Your children (biological, adopted, step-children, or foster children) under age 26
Other tax dependents as permitted by your employer's plan
Confirm with your employer which dependents qualify under your specific plan.
Reimbursement
Purchase individual health insurance for your eligible dependents and pay the premiums out-of-pocket first. Submit proof of premium payments with documentation for reimbursement up to your available allowance. Consult your plan documents to understand documentation requirements for reimbursement.
Eligible expenses
You can submit for reimbursement premiums for your dependents' 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 planStudent Health Insurance Premiums: If ACA-compliant and meets minimum essential coverage standards
Ineligible expenses
You cannot use your dependent premium ICHRA for out-of-pocket medical expenses like deductibles, copays, or prescriptions for your dependents.
Funding
ICHRAs must be funded by employers; employees cannot contribute to ICHRAs. (Thanks boss!)
Your employer sets an allowance amount for dependent coverage. Employers may set separate allowance amounts for employee coverage versus dependent coverage.
Limits
Your employer determines your dependent premium ICHRA allowance amount. There are no IRS maximum contribution limits for ICHRAs.
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 dependent premium ICHRA, you cannot include those premiums in your medical expenses when filing your taxes.
Ownership
Dependent premium ICHRA funds belong to your employer. If you leave your job, you lose access to your ICHRA. The individual health insurance policies you purchased for your dependents remain active—you'll just pay the premiums yourself going forward.
Other benefits
Dependent premium ICHRAs are compatible with HSAs if your dependents 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.