What kind of individual health coverage qualifies for ICHRA reimbursement?

To participate in an ICHRA and receive reimbursements, an employee must be enrolled in individual health coverage that qualifies as minimum essential coverage (MEC) as defined by the Affordable Care Act.

Coverage that qualifies

• Plans purchased through the ACA marketplace (Healthcare.gov or state-based exchanges)
• Plans purchased through a private health insurance exchange
• Plans purchased directly from a health insurance carrier (off-exchange plans)
• Medicare Part A, Part B, Part C (Medicare Advantage), and Part D
• Medicaid (though coordination rules apply)
• CHIP (Children's Health Insurance Program) for eligible dependents
• Student health plans for dependent children enrolled in college
• Individual plans embedded in association health plans, if MEC-qualifying

Coverage that does not qualify

• Short-term limited duration insurance (STLDI)
• Health care sharing ministry programs
• Fixed indemnity plans
• Accident-only or critical illness policies
• Coverage consisting solely of excepted benefits (such as standalone vision or dental)

These types of coverage do not meet MEC requirements and therefore cannot be used to satisfy the individual coverage requirement for ICHRA participation.

Why this matters

Employees must maintain qualifying coverage for any month they want to receive ICHRA reimbursements. If an employee's coverage lapses or they switch to a non-qualifying plan, they become ineligible for reimbursement until qualifying coverage is reinstated. Employers typically require employees to provide proof of MEC enrollment as part of the ICHRA substantiation process.