New Individual Coverage HRA Allows You to Reimburse Employees for Health Insurance
The new Individual Coverage HRA (ICHRA) lets you help employees with their health care costs without fear of ACA penalties. Starting January 1, 2020, employers can offer this new ICHRA.
The ICHRA allows you to
- reimburse (free of payroll and income tax) employees’ individual health care premiums and other permitted medical expenses, up to a dollar limit you choose—not one imposed by the government;
- offer a regular group health plan (or not—it’s your choice) to certain employees and ICHRAs to other employees;
- let employees pay for coverage, beyond the amount you reimburse, via a cafeteria plan if those employees have off-Exchange individual insurance coverage;
- offer higher reimbursement levels to older workers and workers with more dependents;
- let employees roll over excess ICHRA funds from year to year, without limitation; and
- help employees with their health care costs without fear of running afoul of the ACA and its dreaded $100 per-employee-per-day penalty.
The ICHRA is a plan for employees. It’s not for the owners of partnerships, proprietorships, or S corporations.
Want to know more? Have some tax questions of your own? Get in touch with us and we’ll guide you thru the tax and accounting process.