Can an ICHRA reimburse for dependent coverage?
Yes. Employers can design their ICHRA to reimburse employees for dependent coverage, but this is an employer choice—not a requirement. The plan documents must specify whether dependents are included and under what terms.
How dependent coverage works in an ICHRA
When an employer chooses to include dependent coverage, the employee can submit reimbursement claims for individual health insurance premiums and other qualified expenses (if allowed by the plan) for their eligible dependents. Dependents typically include:
The employer's plan documents define exactly who qualifies as a dependent for purposes of the ICHRA.
Dependent coverage requirements
Just like the employee, dependents must be enrolled in individual health coverage that meets minimum essential coverage (MEC) requirements to be eligible for reimbursement. Dependents covered under plans that don't qualify as MEC—such as short-term limited duration insurance—cannot have their expenses reimbursed through the ICHRA.
Employees will need to provide proof of their dependents' MEC enrollment as part of the substantiation process. For more details, see: What documentation do employees need to provide to receive reimbursement?
Allowance structures for dependents
Employers have flexibility in how they set allowances when dependents are included. Common approaches include:
Single allowance: The employer provides one allowance amount that covers the employee and any dependents. The employee uses it to cover their own premium and their dependents' premiums as needed.
Tiered allowances: The employer sets different allowance amounts based on coverage level—for example, employee-only, employee plus spouse, employee plus children, or family. This mirrors how traditional group plans often structure contribution levels.
Per-person allowances: The employer sets a base allowance for the employee and an additional amount for each dependent. This approach allows allowances to scale with family size.
The structure must be applied consistently across employees in the same class.
Variations based on dependents are permitted
Unlike many other ICHRA design factors, employers are allowed to vary allowance amounts based on the number and age of dependents. This recognizes that individual health insurance premiums are typically higher for older individuals and that families with more dependents have greater coverage costs.
What if an employer doesn't include dependent coverage?
If the employer's ICHRA is limited to employee-only coverage, employees cannot receive reimbursement for dependent premiums or expenses through the ICHRA—even if they have unused allowance. Dependents would need to obtain coverage separately, potentially through the marketplace (where they may qualify for premium tax credits if not offered an affordable ICHRA).