Federal regulations require employers to define employee classes when offering an ICHRA. Each class must be treated consistently:
- The same class cannot be offered a choice between an ICHRA and a group health plan.
- Allowance amounts must be uniform within a class (with limited rating flexibility).
See: Employee Job Classes Under ERISA for definitions commonly used across benefit regulations.
How Classing Works in Practice
Employers may:
- Offer a group plan to one class, and
- Offer an ICHRA to another
…but may not allow employees in the same class to choose between the two. Or, employers can simply offer an ICHRA to all employees with no other health plan options.
Minimum Class Size Rule
If an employer offers both:
- a group health plan to some classes, and
- an ICHRA to other classes,
Then certain class types must meet minimum size requirements, which vary based on employer size. This rule prevents employers from steering high-risk individuals into the individual market.
Uniformity Requirement
Once an employee is grouped into a class:
- The same allowance rules must apply to every employee in that class.
- Employers may vary allowances by class, not by individual.