What types of expenses can be reimbursed through an ICHRA?

The primary purpose of an ICHRA is to reimburse employees for individual health insurance premiums, but employers can choose to allow reimbursement for other qualified medical expenses as well.

Individual health insurance premiums

This is the core reimbursable expense for an ICHRA. Employees can be reimbursed for premiums they pay for individual health coverage that meets minimum essential coverage (MEC) requirements, including:

• Plans purchased through the ACA marketplace
• Plans purchased through a private exchange
• Plans purchased directly from an insurance carrier
• Medicare premiums (Parts A, B, C, and D) for eligible employees

Other qualified medical expenses

At the employer's discretion, the ICHRA can also reimburse expenses that qualify under IRS Code Section 213(d). These include a broad range of out-of-pocket healthcare costs such as:

• Deductibles, copays, and coinsurance
• Prescription medications
• Dental and vision care
• Mental health services
• Medical equipment and supplies

The employer defines which of these expenses, if any, are eligible for reimbursement under their specific ICHRA plan design.

What cannot be reimbursed

Certain expenses are not eligible for ICHRA reimbursement, including:

• Premiums for coverage that does not qualify as MEC (such as short-term limited duration plans or health sharing ministries)
• Premiums paid with pre-tax dollars through another arrangement
• Expenses already reimbursed through another source

Employer discretion

Employers have flexibility in designing their ICHRA. Some employers choose to limit reimbursements strictly to individual health insurance premiums for simplicity, while others open it up to a broader range of qualified expenses. The specific terms should be clearly documented in the ICHRA plan documents provided to employees.