What is an ICHRA (Individual Coverage HRA)?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded account that reimburses employees on a pre-tax basis for premiums and medical expenses of individual ACA-compliant health insurance they buy themselves, in place of a traditional group plan (HealthCare.gov — ICHRA; IRS final rules, 2019).
What the government has said, on the record
“Specifically, the final rules allow integrating HRAs and other account-based group health plans with individual health insurance coverage or Medicare, if certain conditions are satisfied (an individual coverage HRA).”
— U.S. Departments of the Treasury, Labor, and Health & Human Services, U.S. Departments of the Treasury, Labor, and Health & Human Services, Final rule, Health Reimbursement Arrangements and Other Account-Based Group Health Plans (Federal Register), 2019-06-20 (source)
Editor’s note
Agency statement from the 2019 tri-agency final rule that created the Individual Coverage HRA (ICHRA), effective for plan years beginning on or after January 1, 2020.
Who said this
What it means
- ICHRAs let a business of any size fund individual coverage instead of sponsoring a group plan.
- Employees must have qualifying individual health insurance to receive ICHRA reimbursements.
Action steps
- Decide the monthly allowance and employee classes before adoption.
- Give employees written notice at least 90 days before the plan year starts.
Risks & deadlines
- Accepting an ICHRA that meets affordability rules generally makes the employee ineligible for Marketplace price help on the same coverage — see acadirectanswers.com for Marketplace mechanics.
Source:
Last verified: 2026-07-19
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