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How can we improve ICHRAs?

A new study offers up three changes to improve ICHRAs, either through regulation or statutory changes made by Congress.

By Alan Goforth | October 29, 2020 at 10:19 AM
HRA letters ICHRAs are similar to other HRAs, such as health savings accounts, in that they allow employers to set aside funds to reimburse employees for expenses related to health care. (Photo: Shutterstock)

Individual coverage health reimbursement arrangements (ICHRAs), which authorize employers to subsidize individual coverage that workers purchase on their own, have made little headway in New York, according to a new study by the United Hospital Fund. Although they took effect last January, which was too late for many employers’ open enrollment, they are an option for this enrollment season, said Peter Newell, director of the fund’s Health Insurance Project.

ICHRAs are similar to other HRAs, such as health savings accounts, in that they allow employers to set aside funds to reimburse employees for expenses related to health care. In the case of ICHRAs, however, no account is actually established; instead, employer groups allocate funds for each employee, and then employees submit claims to employers (or administrators) for reimbursement, with the reimbursement amounts not taxed as income for the workers.

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