Individual Coverage HRAs (ICHRAs) use §213(d) expenses as the foundation but operate under a distinct regulatory framework that allows for premium reimbursement and optional medical expense reimbursement.
Refer to IRC §213(d) Medical Expenses page for more detailed information on allowable expenses.
ICHRAs Can Reimburse Individual Market Premiums
Only ICHRA and QSEHRA can reimburse:
- Marketplace premiums
- Off-exchange individual health premiums
- Student health insurance
- Medicare Part A, B, D, MA
- Medicare supplement (Medigap) premiums
This is the defining feature of ICHRAs.
Employers Choose Whether to Cover 213(d) Medical Expenses
ICHRAs may be designed as:
- Premiums-only, or
- Premiums + 213(d) medical expenses
If 213(d) expenses are allowed, the standard substantiation rules apply to all non-premium reimbursements.
In practice, many employers choose a premiums-reimbursable-only ICHRA design. This keeps administration simple, reduces substantiation burden, and aligns with the primary purpose of ICHRAs – funding employees’ Individual and Family Plan (IFP) premiums.
Mandatory Proof of Individual Coverage
Employees must maintain qualified individual coverage and provide annual attestation.
No attestation = no reimbursement.
Reimbursements Require Substantiation
Must include:
- Premium amount
- Proof of coverage
- Date(s) of service for non-premium expenses
No Double Dipping
Employees cannot:
- Use Premium Tax Credits (ACA Subsidies) and an ICHRA simultaneously
- Use premium tax credits for any month they are offered an affordable ICHRA
- Submit the same expense to an HSA, FSA, HRA, or spouse’s plan
Dependent Eligibility
Same rule as HRAs and FSAs:
- Spouses and IRS tax dependents only
Interaction With HSAs
If an ICHRA reimburses only premiums, the employee may still contribute to an HSA (if enrolled in an HDHP, or eligible Bronze or Catastrophic plan in the Individual Market).
If it reimburses 213(d) expenses, the employee becomes HSA-ineligible unless the ICHRA is limited-purpose or post-deductible.