ICHRA Special Enrollment Period — How it Works

Tl;dr

• The Individual Coverage HRA (ICHRA) is a flexible health reimbursement arrangement that allows employers to reimburse employees for tax-free health insurance premiums and medical expenses. You can learn more about ICHRA here.

• Special Enrollment Period (SEP) is a time outside the yearly Open Enrollment Period when eligible individuals can enroll in health insurance. For ICHRA, employees and their dependents qualify for a SEP if they gain access to an ICHRA, allowing them to enroll in individual health coverage.

• Offering an ICHRA to your team is a triggering event, so you can switch to ICHRA any time of the year. Employees can use the SEP to sign up for or switch their health insurance plans. This flexibility ensures that employees can choose coverage that aligns with the ICHRA benefits, even outside the standard enrollment periods.

What is a Special Enrollment Period (SEP)?

The Special Enrollment Period (SEP) is a critical timeframe outside the typical Open Enrollment Period that allows individuals to enroll in health insurance under specific circumstances. For ICHRA, this becomes particularly relevant. When employers decide to offer ICHRA, their employees, as well as their dependents, become eligible for a SEP. This means they can enroll or change individual health coverage outside the usual enrollment window. This flexibility is crucial, especially for those who might miss the Open Enrollment Period or experience significant life changes, like gaining access to an ICHRA, that affect their health insurance needs.

Can I switch to ICHRA/Thatch any time of the year?

Yes, switching to an ICHRA plan can occur at any time of the year. This is permitted because offering an ICHRA plan to your employees is considered a 'triggering event.' What this means for businesses is significant: there's no need to wait for the traditional enrollment periods to make this switch. Some reasons why you might want to switch to ICHRA include:

• You want to switch from a group health plan you or your team aren't happy with.

• You're a new business and want to offer health benefits to your employees.

• You want to offer a more flexible health benefit to your team. For example, your group plan might not cover specific doctors, drugs, or treatments that your employees need.

Employees, upon receiving the offer of an ICHRA from their employer, can use their SEP to immediately start shopping for individual coverage that suits their personal needs and budget without being restricted to the typical enrollment calendar.

What if I just started a group health plan?

The process can be straightforward if you've recently initiated a group health plan but are considering switching to ICHRA. While transitioning from a traditional group health plan to an ICHRA can seem daunting, a good ICHRA administrator (shameless plug for Thatch 😬) can make it easy, and it may be beneficial in the long term. Once you decide to offer an ICHRA, your employees will become eligible for the Special Enrollment Period, allowing them to switch to individual health insurance plans that align with ICHRA. It's important to communicate this change clearly to employees, ensuring they understand the new benefits and the steps they need to take to enroll in new coverage.

Why would I switch from a group health plan to ICHRA?

Switching from a traditional group health plan to an ICHRA can be advantageous for several reasons. Firstly, ICHRA offers greater flexibility for both employers and employees. Employers can set fixed reimbursement rates, while employees can choose health plans that best fit their needs. This can lead to more personalized and potentially more affordable health coverage options for employees. Additionally, ICHRAs can be more cost-effective for businesses, as they provide a predictable budget for healthcare expenses, unlike traditional group plans that often come with fluctuating premiums. The transition to ICHRA also reflects a modern approach to employee benefits, potentially increasing employee satisfaction and retention by offering them more control over their health insurance choices.